HD 

.UrFs 


UC-NRLF 


$B  3i  m^ 


I 


GIFT  OF 


A  FINANCIAL  HISTORY 


OF 


THE  PHILADELPHIA 
ELECTRIC   COMPANY 

BY 

E.  M.  PATTERSON,  PH.D. 

WHARTON  SCHobli  OF  FINANCE  AND  COMMERCE 
UNIVERSITY  OF  PENNSYLVANIA 


THIS  ANALYSIS  SHOWS  THAT 

THIS  COMPANY  IS  IN  ABSOLUTE  CONTROL,  OF  THE  ELEC- 
TRIC LIGHT  AND  POWER  BUSINESS  IN  THE  CITY  OF 
PHILADELPHIA. 

IT  WAS  OVERCAPITALIZED  BY  MORE  THAN  ^20,000,000  AT 
THE  TIME  OF  ITS  FORMATION  IN  1899. 

IN  SPITE  OF  THIS  TREMENDOUS  OVERCAPITALIZATION,  IT 
HAS  BEEN  ABLE  TO  MAINTAIN  INTEREST  ON  ITS  BONDS 
AND  SINCE  1902  DIVIDENDS  ON  ITS  STOCK,  THESE 
DIVIDENDS  NOW  BEING  AT  THE  RATE  OF  7  PER  CENT. 
PER  ANNUM. 

IN  ORDER  TO  MAINTAIN  THESE  INTEREST  AND  DIVIDEND 
PAYMENTS  THE  CITY  OF  PHILADELPHIA  AND  ITS  CITI- 
ZENS HAVE  EACH  YEAR  PAID  NEARLY  $1,000,000  IN 
EXCESS  OF  A  FAIR  CHARGE  FOR  SERVICE  RENDERED. 


WHILE  OVERCAPITALIZATION  IS  COMMON  AMONG  UTILITY 
COMPANIES,  THE  PHILADELPHIA  ELECTRIC  COMPANY  IS 
ONE  OF  THE  WORST  OFFENDERS  IN  THIS  RESPECT. 


\       -  ^V^— >— •V'-'- 


PUBLISHED  As  An  appendix 

^'^   TO.  T.ai<;';'\  ;\'  ;\  i  i  ;\ 

ANNUAL  REPORT  QJ*  THli\  iMRECTflR  OF  PfBLIC  WORKS 
PHILADELPHIA 


1z 


with  the  C«m» 
of  the  Autno- 


m 


!uY^^ 


Digitized  by  the  Internet  Archive 

in  2007  with  funding  from 

IVIicrosoft  Corporation 


http://www.archive.org/details/financialhistoryOOpattrich 


FINANCIAL  HISTORY 

OF    THE 

philadp:lphia  electric  company 


FOREWORD 


"When  the  Philadelphia  Electric  Company  was  incorporated  in 
1899  it  was  over-capitalized  to  the  extent  of  at  least  $20,000,000. 
Because  of  this  Philadelphia  and  its  citizens  have  been  paying 
each  year  for  electricity  nearly  $1,000,000  more  than  would  other- 
wise have  been  necessary.  Having  absolute  control  of  the  busi- 
ness of  furnishing  electric  current  there  was  nothing  to  restrain 
the  company  from  placing  its  charges  at  the  point  which  it  was 
thought  would  yield  the  maximum  net  returns. 

This  policy  was  followed.  Interest  payments  on  bonds  have 
been  met  with  unfailing  regularity  and  as  early  as  1902  dividends 
were  paid  on  the  stock.  By  1903,  only  four  years  after  the  incor- 
poration of  the  company,  these  dividends  rose  to  5  per  cent, 
per  annum,  and  since  1913  have  been  at  the  rate  of  7  per  cent. 
Moreover,  the  last  report  issued  shows  that  on  December  31, 
1914,  there  was  on  hand,  after  dividend  payments  of  $1,574,000, 
a  surplus  of  nearly  as  much  more.  To  be  exact  this  surplus  was 
$1,471,747. 

This  situation  was  brought  about  by  organizing  a  series  of 
holding  companies.  One  after  the  other,  singly  and  in  groups, 
the  numerous  electric  properties  throughout  the  city  w^ere  brought 
together,  until,  in  1902,  the  acquisition  of  the  Kensington  Electric 
Company  completed  the  process.  The  Philadelphia  Electric  Com- 
pany owns  all  or  nearly  all  of  the  stock  of  five  other  companies, 
three  of  which  are  themselves  holding  companies. 

At  the  basis  of  this  complicated  structure  are  some  twenty- 
five  operating  companies.    Their  independence  of  action  has,  of 

324153 


course,  entirely  disappeared;  but  their  corporate  organization 
and  their  securities  still  exist. 

Prior  to  1895  a  number  of  companies,  including  the  Brush, 
United  States,  Philadelphia,  Northern,  Penn,  and  perhaps  the 
Columbia,  were  brought  together  as  the  "Electric  Trust". 
Closely  associated  with  them  was  the  Edison,  which  leased 
certain  conduits  belonging  to  the  Penn.  In  order  to  consolidate 
this  organization  there  was  incorporated  in  1895  the  Pennsyl- 
vania Heat,  Light  &  Power  Company.  This  new  company 
acquired  nearly  all  of  the  stock  of  the  companies  in  the  group. 
On  this  stock  there  had  been  paid  in  by  the  stockholders  no  more 
than  $3,131,200,  but  the  new  company  issued  an  enormous 
volume  of  new  securities,  the  net  increase  amounting  to 
$6,763,100. 

The  next  step  was  to  incorporate  in  1898  the  Pennsylvania 
Manufacturing  Light  and  Power  Company  which  acquired  the 
Pennsylvania  Heat,  Light  and  Power  Company  (the  holding 
company  just  mentioned)  and  a  number  of  other  companies 
including  the  Hamilton,  Powelton,  Manufacturers',  Diamond, 
Suburban,  Wissahickon,  West  End,  Bala  and  Merion,  German- 
town  and  Keystone  companies.  Again  there  was  an  increase  in 
the  volume  of  outstanding  securities,  this  time  amounting  to 
$2,076,811. 

In  1899  four  companies,  i.  e.,  the  Southern,  Overbrook,  Beacon 
and  Cheltenham,  were  brought  together  by  incorporating  the 
National  Electric  Company.  Once  more  there  was  an  increase  in 
securities,  the  expansion  in  this  instance  amounting  to  $2,825,960. 

This  last  step  had  brought  all  but  one  of  the  companies  oper- 
ating within  the  city  limits,  and  several  outside  companies  as 
well,  under  the  control  of  two  large  holding  companies,  the  Penn- 
sylvania Manufacturing  Light  and  Power  Company  and  the 
National  Electric  Company.  To  bring  them  together  the  Phila- 
delphia Electric  Company  was  incorporated  in  New  Jersey  on 
October  5,  1899.  The  two  holding  companies  just  mentioned 
were  acquired  with  still  another  increase  in  securities,  this  last 
expansion  amounting  to  $9,139,732.  There  was  thus  a  total  in- 
crease of  $20,805,603  in  outstanding  securities  through  the  organ- 
ization one  after  the  other  of  these  four  holding  companies. 


Ill 


These  estimates  are  carefully  worked  out  in  the  main  part  of 
this  report  where  the  evidence  will  be  found  presented  in  detail; 
a  careful  examination  of  the  data  there  submitted  will  show  that 
these  conclusions  are  conservative.  It  has  nowhere  been  assumed 
that  security  issues  were  excessive.  In  every  case  of  doubt  it 
has  been  taken  for  granted  that  the  outstanding  stocks  and  bonds 
represented  actual  payments  to  the  companies  by  the  security 
holders.  It  may  well  be  that  $20,805,603  is  altogether  too  low  a 
figure.  Accusations  have  frequently  been  made  that  in  still  other 
instances  stock  was  issued  "full  paid"  when  actually  little  or  no 
cash  was  received  for  it.  To  the  extent  that  such  charges  are 
true  the  conclusions  just  stated  are  too  conservative.  The  figure 
given  is  a  minimum  and  not  a  maximum. 

To  the  city  and  people  of  Philadelphia  these  increases  were  of 
great  importance.  The  movement  throughout  was  characterized 
by  the  policy  of  turning  stock  into  bonds.  Each  holding  com- 
pany issued  its  bonds  in  payment  for  the  stock  of  the  companies 
it  acquired  and  then  put  out  in  addition  a  large  volume  of  its 
own  stock.  Even  had  there  been  no  increase  in  the  volume  of 
securities  this  would  have  been  serious.  If  any  one  or  all  of  the 
small  companies  had  failed  to  pay  dividends  on  its  stock,  the 
general  public  would  have  been  little  concerned.  Owners  of  stock 
would  merely  have  been  said  to  have  risked  their  funds  in  an 
unsuccessful  enterprise.  Changing  the  stock  into  the  bonds  of 
the  holding  companies,  however,  altered  the  situation.  Bond- 
holders are  technically  not  owners  but  creditors.  Failure  to 
receive  interest  on  bonds  has  the  appearance  of  serious  misfor- 
tune. Ability  of  the  companies  to  meet  these  payments  is  viewed 
as  essential.  The  inability  of  a  public  service  corporation  to  do 
so  seems  to  be  prima  facie  evidence  of  a  need  for  higher  rates. 
Stockholders  who  can  thus  readily  turn  their  stock  into  bonds 
have  thereby  greatly  strengthened  their  position.  Outward 
appearances  are  in  their  favor. 

At  each  stage  of  the  consolidation  process  additional  securities 
were  issued.  Stock  of  underlying  companies  was  in  each  case 
exchanged  for  the  bonds  of  the  new  holding  company  and  these 
exchanges  were  usually  at  very  high  prices.    Then  a  large  volume 


IV 

of  the  stock  of  the  holding  company  was  issued.  Purchasers  of 
this  stock  ordinarily  paid  but  little  for  it  but  in  a  few  months 
or  perhaps  years  exchanged  it  on  favorable  terms  for  the  bonds 
of  the  new  holding  company. 

An  illustration  is  found  in  the  preferred  stock  of  Pennsylvania 
Heat,  Light  and  Power  Company.  This  stock  had  a  par  value 
of  $50  per  share  but  there  was  paid  in  on  it  only  $35  per  share; 
yet  bonds  of  Pennsylvania  Manufacturing  Light  and  Power 
Company  were  later  given  for  it  on  the  basis  of  $66  per  share. 
The  common  stock  of  this  same  company  had  been  issued  as  a 
bonus  to  preferred  stockholders  and  yet  it  was  purchased  in  the 
same  manner  for  $24  per  share. 

A  still  higher  price  was  paid  for  the  stock  of  Pennsylvania 
Manufacturing  Light  and  Power  Company.  On  this  only  $5  per 
share  was  ever  paid  but  it  was  purchased  in  1899  with  bonds  of 
Philadelphia  Electric  Company  for  $35  per  share. 

Philadelphia  Electric  Company  at  the  present  time  is  respon- 
sible directly-  or  through  guarantee  for  interest  payments  on 
$28,276,502  of  bonds  which  were  issued  in  exchange  for  stock 
in  the  manner  described.  Some  of  this  interest  is  at  the  rate  of 
4  per  cent,  and  some  at  5  per  cent.,  all  the  interest  payments 
thereon  amounting  to  $1,263,683  each  year. 

It  is,  of  course,  maintained  that  no  matter  how  excessive  these 
security  issues  may  have  been,  the  company  has  in  later  years 
invested  large  amounts  in  the  property  and  that  its  actual  value 
is  now  equal  to  the  amount  of  its  bonds  and  stock.  Only  an 
accurate  appraisal  can  settle  this  point  and  it  has  been  an- 
nounced that  an  appraisal  is  now  under  way. 

In  the  meantime  it  may  be  pointed  out  that  an  increase  in 
the  value  of  the  properties  sufficient  to  offset  the  $20,805,603 
that  was  mentioned,  must  have  come  from  earnings  and  have 
been  possible  only  because  the  rates  charged  were  more  than 
sufficient  to  meet  operating  expenses  and  pay  interest  and  divi- 
dends on  the  outstanding  bonds  and  stock. 

This  presents  two  general  alternatives.  If  rates  charged  have 
been  high  enough  to  make  this  possible  and  the  value  of  the 
property  is  now  equal  to  the  security  issues,  it  should  now  be 


possible  and  proper  to  reduce  the  rates.  Present  charges  would 
certainly  be  unnecessarily  high. 

If,  however,  an  accurate  appraisal  shows  that  this  increase  in 
value  has  not  been  accomplished,  it  is  evident  that  the  rates  are 
high  enough  to  pay  a  return  on  a  capitalization  that  is  still  in- 
flated. In  either  case  it  seems  clear  that  the  rates  should  and 
could  be  reduced. 

In  the  following  pages  will  be  found  the  detailed  evidence  in 
support  of  the  conclusions  thus  briefly  stated. 


/ 

To  present  clearly  the  history  of  Philadelphia  Electric  Com- 
pany it  is  necessary  to  explain  the  electric  light  situation  in 
Philadelphia  twenty  and  more  years  ago.  The  organization  of 
today  is  a  consolidation  of  a  large  number  of  small  companies 
and  has  attained  its  present  form  through  a  process  of  gradual 
development.  All  of  the  facts  regarding  this  growth  are  not 
available  to  the  public  and  a  history  written  by  one  who  did  not 
participate  in  the  events  is  necessarily  incomplete.  In  the  fol- 
lowing account  there  are  included  only  statements  that  have 
been  very  carefully  verified.  As  a  method  of  guarding  against 
error  frequent  footnotes  have  been  introduced  in  support  of  all 
important  facts. 

By  the  end  of  1896  there  had  been  formed  19  different  com- 
panies to  furnish  electricity  within  Philadelphia.  These  com- 
panies are  given  in  the  accompanying  table  (designated  as  table 
I).  For  each  company  there  is  indicated  the  date  of  incorpora- 
tion, the  amount  of  capital  stock  authorized,  the  amount  of 
stock  issued,  the  amount  "paid  in"  on  the  stock  issued,  and  the 
amount  of  bonds  outstanding.^ 


1  The  information  presented  in  this  table  has  been  compiled  from  a  statement  by  Philadel- 
phia Electric  Company  to  the  Philadelphia  Stock  Exchange  on  January  31,  1902,  and 
presumably  all'of  the  facts  are  as  of  that  date. 


112 


TABLE  I 

SECURITIES  ISSUED  BY  ORIGINAL  ELECTRIC  LIGHT  COMPANIES 
OPERATING  IN  THE  CITY  OF  PHILADELPHIA 


Date 

Amount 

Bonds 

Names  of  companies 

of  in- 

Authorized 

Issued 

"paid  in"  on 

out- 

corpo- 

capital 

capital 

stock  issued 

standing 

ration 

Edison  Electric  Light  Co.  of 

Philadelphia 

1886 

$2  000  000 

$2  000  000 

S2  000  000 

Brush  Electric  Light  Co.  of 

Philadelphia 

1881 

1  000  000 

1  000  000 

1  000  000 

United  States  Electric  Light- 

ing Co.  of  Pennsylvania. . 

1881 

1  000  000 

1  000  000 

1  000  000 

Philadelphia  Electric  Light- 

ing Co 

1882 

50  000 

50  000 

50  000 

Powelton  Electric  Co 

1890 

600  000 

599  140 

599   140 

Bala  &  Merion  Electric  Co. . 

1891 

100  000 

50  300 

50  300 

Northern   Electric   Light   & 

Power  Co 

1885 
1890 

1  000  000 
500  000 

650  000 
399  840 

650  000 
399  840 

Suburban  Electric  Co 

Diamond  Electric  Co 

1890 

250  000 

250  000 

250  000 

Manufacturers'  Electric  Co. . 

1890 

250  000 

250  000 

250  000 

West  End  Electric  Co 

1890 

250  000 

237  600 

237  600 

$70  000 

Germantown  Electric  Light 

Co 

1884 

150  000 

125  000 

125  000 

Wissahickon  Electric   Light 

Co 

1893 

250  000 

200  000 

200  000 

Columbia  Electric  Light  Co. 

1892 

100  000 

66  300 

66  300 

28  000 

Hamilton  Electric  Co 

1896 

1  370  000 

1  370  000 

137  000 

Penn  Electric  Light  Co 

1887 

1  000  000 

882  248 

882  248 

Southern   Electric   Light   & 

Power  Co 

1890 
1886 

2  000  000 
1  000  000 

500  000 
124  950 

500  000 
124  950 

Keystone  Light  &  Power  Co. 

Kensington  Electric  Co 

1893 

150  350 

150  350 

150  350 

Totals 

$13  020  350 

«9  905  728 

$8  672  728 

$98  000 

Total  amount  "paid  in"  on  stock  issued $8  672  728 

Total  bonds 98  000 


Total  amount  "paid  in"  on  securities  issued $8  770  728 


113 


Of  this  list,  Edison  Electric  Light  Company  had  the  largest 
capitalization  and  Philadelphia  Electric  Lighting  Company  the 
smallest.  The  aggregate  amount  of  authorized  capital  was  $13,- 
020,350,  of  which  $9,905,728  had  been  issued.  Only  $8,672,728 
had,  however,  been  "paid  in".  The  difference  of  $1,233,000  be- 
tween the  amount  issued  and  the  amount  "paid  in"  is  due  to 
the  fact  that  only  10  per  cent,  or  one  dollar  had  been  paid  on 
each  of  the  $10  shares  of  the  Hamilton  Electric  Company. 

"electric  trust" 

Although  there  are  19  different  companies  in  this  list  their 
operations  had  for  some  years  prior  to  1896  not  been  entirely 
independent.  There  were  numerous  accusations  of  agreements 
among  them.  Passing  by  all  general  charges  and  confining  our 
attention  to  those  of  which  definite  evidence  exists  we  may 
examine  them  in  groups.     Table  II  includes  6  that  were  very 

closely  associated. 

ft 

TABLE  II 


Names  of  companies 

Authorized 
capital 

Capital 
issued 

Amount 
"paid  in"  on 
stock  issued 

Number  of 
shares 

Par 

value 

per 

share 

Edison  Electric  Light  Co.. 
Brush  Electric  Light  Co..  . 
U.  S.  Electric  Lighting  Co. 
Philadelphia     Electric 
Lighting  Co 

$2  000  000 
1  000  000 
1  000  000 

50  000 
1  000  000 

1  000  000 

$2  000  000 
1  000  000 
1  000  000 

50  000 

882  248 

650  000 

$2  000  000 
1  000  000 
1  000  000 

50  000 

882  248 

650  000 

20  000 
10  000 
20  000 

1  000 
1  000  000 

100  000 

$100 

100 

50 

50 

Penn  Electric  Light  Co. . . . 
Northern  Electric  Light  & 
Power  Co. 

1 
10 

Totals 

$6  050  000 

$5  582  248 

$5  582  248 

All  of  these  companies  were  incorporated  in  Pennsylvania, 
except  the  Penn  Electric  Light  Company  which  had  received 
its  charter  from  New  Jersey.  Before  describing  the  relations 
between  them  a  few  facts  regarding  several  of  them  should  be 
recited. 


114 

Edison  Electric  Light  Company  is  the  most  important  in  the 
list.  It  was  chartered  December  13,  1886,  and  its  average  cap- 
italization for  the  period  from  1886  to  1894  was  $1,255,412. 
Dividends  were  paid  by  the  company  during  this  period  as  shown 
in  table  III. 

TABLE  III 

Dividends  paid  by  Edison  Electric  Light  Company  of  Philadelphia 
from  its  organization  in  1886  to  the  end  of  1894 

October  1,  1892,  20  per  cent,  stock  dividend,  return  for  money 

expended  for  plant $200  000 

March  31,  1894,  5  per  cent,  stock  dividend,  return  for  money  ex- 
pended for  plant 87  500 

April  1,  1892,  3  per  cent,  cash 30  000 

October  1,  1892,  4  per  cent,  cash 40  000 

December  31,  1892,  2  per  cent,  cash 29  456 

March  31,  1893,  2  per  cent,  cash 29  460 

June  30,  1893,  2  per  cent,  cash 29  460 

September  30,  1893,  2  per  cent,  cash 29  460 

September  30,  1893,  extra  2  per  cent,  cash 29  460 

December  30,  1893,  2  per  cent,  cash 34  404 

March  31,  1894,  2  per  cent,  cash 34  446 

June  30,  1894,  2  per  cent,  cash 36  908 

September  30,  1894,  2  per  cent,  cash 36  930 

December  31,  1894,  2  per  cent,  cash 36  934 

Total  dividend  for  8  years $684  418 


The  total  dividends  paid  during  the  eight  years  being  $684,418 
on  an  average  capital  of  $1,255,412,  the  average  annual  divi- 
dend was  6.81  per  cent.^ 

The  balance  sheet  at  the  close  of  the  year  1895  and  the  in- 
come account  for  that  year  were  as  follows,  the  former  being 
taken  from  the  Daily  Philadelphia  Stockholder  of  February  17, 
1896,  and  the  latter  from  the  Public  Ledger  of  January  23,  1896. 


1  This  information  about  the  dividends  paid  by  the  company  has  been  taken  from  a 
letter  to  President  William  D.  Marks  written  by  the  Treasurer  of  the  company  on 
January  4,  1895. 


115 


Assets 

Charter 

Patents 

Permanent  plant 1 

Cash 

Cash  payments  on  capital  stock 

advanced 

Bills  receivable  (sub-ledger) 

Bills  receivable,  light  and  power. . 

Le^al  collections 

Capital  stock  in  treasury 

Lease  election  expenses 

Real  estate 

Phila.  Steam,  Heat  &  Power  Co .  . 
Inventory 


Balance  Sheet 

Ldabilitiea 

$5  090  60 

Capital  stock $1 

984  722  22 

349  722  22 

Mortgage 

40  000  00 

596  329  74 

Accounts  payable. .  . 

9  752  49 

30  419  29 

Consumers'  deposits 

490  00 

Profit  and  loss 

68  709  02 

16  055  97 

5  009  04 

25  896  45 

7  392  19 

876  06 

, 

130  80 

21  000  00 

1  064  20 

44  687  17 

S2  103  673  73 


$2  103  673  73 


Income  Account 

Four  2  per  cent,  cash  dividends $147  764  00 

Bills  written  for  hght  and  power 8423  479  54 

Profit  on  merchandise 7  134  07 

Interest 612  60 

Services 124  86 

Collective  lamp  profits 7  159  30 

$438  510  37 
Recapitulation 

Cash  dividends  and  operating  expenses $382  240  30 

Undivided  profits  carried  over 68  709  02 

$450  949  32 

Dividends  of  1895 147  764  00 

Undivided  profits  of  1895 52  459  10 

Total  profit  for  year  1895 $200  223  10 

A  comparison  of  the  information  in  this  balance  sheet,  the 
income  account  and  the  letter  to  President  Marks  shows  the 
company  to  have  been  very  prosperous.  Two  stock  dividends 
amounting  to  $287,500  were  paid  in  1892  and  1894  as  a  return 
for  money  expended  for  plant,  this  money  presumably  having 
been  taken  from  earnings.  Subtracting  this  from  the  $1,984,722 
of  stock  given  in  the  1895  balance  sheet  we  have  $1,697,222. 
This  sum  seems  to  be  the  amount  that  was  invested  in  the  prop- 
erty in  direct  payments  by  the  stockholders  in  cash  and 
patents.  The  remainder  of  the  capital  had  been  accumulated 
from  the  earnings   of  the  company   and  had   been  reinvested 


116 

in  the  property.  Stock  was  then  issued  to  represent  this  invest- 
ment. In  1895  four  2  per  cent,  cash  dividends  were  paid,  a 
total  of  8  per  cent,  which  amounted  to  $147,764.  In  that  year 
the  profits  were  over  10  per  cent,  of  the  capital. 

Less  information  is  available  concerning  the  other  companies 
in  the  list.  Brush  Electric  Light  Company,  incorporated  in 
1881,  is  stated  in  Charter  Book  No.  5,  page  537,  to  have  issued 
1200,000  stock,  10  per  cent,  paid  in,  and  it  is  also  stated  that 
1000  full  paid  shares  "will  be  issued  for  ^patent  rights".  This 
account  is  not  clear,  as  it  leaves  $80,000  of  a  capitalization  of 
$200,000  unexplained.  Other  references,  however,  make  quite 
clear  the  fact  that  the  capitalization  was  later  increased  and 
that  much  of  the  company's  stock  did  not  represent  cash  pay- 
ments. Thus  there  is  a  statement  in  Select  Council  by  Mr. 
Hawkes,^  who  alleged  that  of  the  $1,000,000  paid  up  capital, 
$800,000  was  for  the  purchase  of  patent  rights.  Also  Arthur  H. 
Lea  testified  on  December  4,  1895,  that  the  reports  of  the 
Auditor  General  of  Pennsylvania  showed  that  $800,000  of  the 
company's  stock  had  been  issued  for  patents.^ 

United  States  Electric  Lighting  Company  was  originally  in- 
corporated in  1881  as  Maxim  Electric  Light  and  Power  Com- 
pany, its  name  being  changed  in  1883.  Of  its  $1,000,000  stock, 
$950,000  was  given  for  patent  rights  and  $50,000  for  cash.^ 

Penn  Electric  Light  Company  was  incorporated  in  New 
Jersey  in  1887  with  a  capitalization  of  $1,000,000  in  shares  of 
$1  each.  Although  the  shares  were  "full  paid",  there  was 
actually  invested  in  cash  only  about  $10,000.^  This  company 
was  authorized  to  lay  conduits  in  the  streets  of  Philadelphia 
and  then  rented  the  use  of  the  conduits.  The  charge  made  to 
the  Edison  Electric  Light  Company  for  their  use  in  1895  was 
at  the  rate  of  $13,000  per  annum. 

It  is  very  evident  from  the  information  available  that  the 
$5,582,248  full  paid  stock  that  had  been  issued  by  this  group 


1  See  Public  Ledger,  Vol.  CXVII,  No.  6. 

2  Testimony  of  Wm.  D.  Marks  and  Arthur  H.  Lea  on  December  4  and  5,  1895,  before  a 
committee  of  the  Pennsylvania  House  of  Representatives  appointed  in  the  session  of  1892 
and  1893  to  investigate  electric  lighting  in  the  County  of  Philadelphia. 

»  Charter  Book  No.  6,  p.  91. 


117 

of  six  companies  was  considerably  in  excess  of  any  actual  cash 
investment  in  their  properties  aside  from  patents.  Active  com- 
petition between  them  would,  of  course,  have  made  difficult, 
if  not  impossible,  the  payment  of  any  return  to  the  stock- 
holders. The  method  adopted  to  prevent  competition  is  of 
interest. 

Brush  Electric  Light  Company,  United  States  Electric  Light 
Company,  and  Philadelphia  Electric  Lighting  Company  com- 
prised what  was  known  as  "Electric  Trust,"  whose  trustees  in 
1896  were  J.  Lowber  Welsh,  Thomas  Dolan,  William  Wood,. 
Richard  Brock,  Clement  B.  Newbold,  George  W.  Hill,  John 
Boyd  and  A.  J.  De  Camp.^  There  is  some  confusion  in  the 
accounts  of  this  organization.  Apparently  it  was  not  incor- 
porated, but  was  literally  a  trust.  In  the  Philadelphia  Press 
of  January  3,  1892,  and  the  Public  Ledger  of  January  4,  1892,. 
will  be  found  an  account  taken  from  affidavits  presented  on 
January  2,  1892,  in  an  injunction  suit  brought  in  Court  of 
Common  Pleas  No.  3  before  Judges  Finletter  and  Gordon.  It 
was  alleged  that  the  three  companies  named  formed  a  trust  on 
September  20,  1885,  and  at  this  time  (1892)  had  offices  in  the 
Mutual  Life  Building  (10th  and  Chestnut  Streets).  In  ex- 
change for  shares  of  stock  of  the  three  companies  deposited 
with  the  trustees,  trust  certificates  were  issued,  part  of  which 
were  noncumulative  preferred  and  part  of  which  were  common. 
The  Electric  Trust  also  held  either  a  majority  or  exactly  one- 
half  of  the  stock  of  Northern  Electric  Light  and  Power  Com- 
pany and  a  controlling  interest  in  Penn  Electric  Light  Com- 
pany. Electric  Trust  certificates  or  shares  were  issued  to  the 
amount  of  $500,000  of  preferred  and  $3,144,000  of  common,  or 
a  total  of  $3,644,000.  No  reference  has  been  found  as  to  the 
terms  of  exchange  except  that  F,  W.  Kennedy  received  4  pre- 
ferred certificates  of  $100  each  in  exchange  for  50  shares  of 
United  States  Electric  Lighting  Company  stock.-  This  com- 
bination was  also  alleged^  to  have  entered  into  a  combination 
and    conspiracy    with    the    Southern,    Powelton,    Wissahickon,. 


»  Public  Ledger  May  16,  1896. 
2  Public  Ledger,  January  4,  1892. 
'  Idem. 


118 

Diamond,  Manufacturers',  Germantown  and  Suburban  com- 
panies to  farm  out  among  themselves  the  work  of  lighting  with 
electricity  the  streets  of  the  city. 

In  1893  a  special  committee  of  the  House  of  Representatives 
of  the  Pennsylvania  State  Legislature  was  appointed  to  in- 
vestigate the  electric  light  combine  in  Philadelphia,  the  chair- 
man being  Major  Samuel  A.  Losch.  At  a  hearing  held  on 
April  28,  1893,^  the  relations  between  Penn  Electric  Company 
and  Electric  Trust  were  explained  as  follows: 

Penn  Electric  Company  was  capitalized  at  $1,000,000.  There  were 
at  that  time  1,000,000  shares,  of  which  800,000  were  issued  and 
200,000  held  in  the  treasury.  Of  the  stock  issued,  a  considerable 
amount  was  subject  to  a  document  drawn  up  in  May,  1887,  known  as 
the  "  Dolan  Agreement".  This  was  made  by  James  McManes,  David 
H.  Lane  and  George  E.  Vickers  on  one  side,  and  Thomas  Dolan  on 
the  other.  Mr.  Dolan  was  to  buy  200,000  shares  and  to  have  the 
irrevocable  right  to  vote  160,000  additional  shares,  the  persons  buying 
these  shares  taking  them  only  on  the  condition  that  they  consent  to 
this  arrangement.  Mr.  Dolan  paid  for  his  own  shares  (number  not 
given)  $60,000  in  cash  and  $100,000  in  Electric  Trust  certificates. 
This  was  sufficient  to  give  control  of  Penn  Electric  to  the  Electric 
Trust,  of  which  Thomas  Dolan  was  a  trustee. 

Under  another  agreement  drawn  up  on  July  14,  1887,  and  signed 
by  John  Lowber  Welsh  and  Benton  K.  Jamison,  $45,000  was  paid  for 
75,000  shares  of  Penn  stock  which  was  transferred  to  Electric  Trust, 
these  shares  also  being  voted  by  Thomas  Dolan.  The  Penn  Company 
had  an  agreement  with  the  Edison  Company  giving  to  the  latter  the 
exclusive  right  to  Penn  conduits,  an  agreement  which  prevented 
other  companies,  especially  Western  Union,  from  using  them.  The 
net  result  was  that  the  Penn  Company  was  said  not  to  be  profitable. ^ 
It  is  difficult  to  believe,  however,  that  this  was  true  for  long.  If  it 
be  correct  that  only  $10,000  was  paid  in  on  the  $1,000,000  of  stock 
and  also  true  that  Edison  Electric  Light  Company  paid  $13,000  in 
rentals  for  the  Penn  conduits  in  1895  there  was  certainly  an  excellent 
return  on  the  actual  investment  at  that  time.  Measured  on  the 
$1,000,000  of  stock  issued  the  return  was,  of  course,  very  small. 

This  description  is  inserted  to  illustrate  the  close  relation- 


1  Philadelphia  Press,  April  29,  1893. 
Philadelphia  Record,  April  29,  1893. 
Philadelphia  Times,  April  29,  1893. 

2  Ibid.  Also  report  of  Chairman  Samuel  A.  Losch  of  Committee  of  Pensylvania  House 
of  Representatives  appointed  during  the  session  of  1892  and  1894  to  "investigate  electric 
lighting  in  the  County  of  Philadelphia." 


119 

ship  existing  between  the  various  companies  named.  Of  the 
six  named  above  five  were  closely  united  under  the  Electric 
Trust,  while  the  contract  between  the  Penn  and  Edison  Com- 
panies shows  a  close  relationship  among  all  six. 

PENNSYLVANIA    HEAT,    LIGHT   AND    POWER   COMPANY 

To  unite  them  still  more  closely  and  as  a  preliminary  to  further 
consolidations,  the  Pennsylvania  Heat,  Light  and  Power  Company 
was  incorporated  on  Februarj^  18,  1895,  in  Pennsylvania,  with  a 
nominal  capital  of  $10,000,  for  the  purpose  of  receiving  an  ordi- 
nance previously  introduced  and  subsequently  passed  by  Councils 
of  Philadelphia  and  approved  by  the  mayor  July  3,  1895.  This 
capitalization  was  later  increased  to  $10,000,000,  of  which 
$5,000,000  was  common  and  $5,000,000  was  6  per  cent,  cumu- 
lative preferred.  The  common  stock  "was  issued  full  paid  for 
certain  patent  rights,  real  estate  and  securities".  On  the  pre- 
ferred stock  there  was  paid  in  30  per  cent.,  or  $15  on  each  $50 
share,  a  total  of  $1,500,000.  In  March,  1896,  it  offered  to  lease 
the  Edison  Electric  Light  Company  of  Philadelphia  for  a 
period  of  99  years  at  a  guaranteed  dividend  of  8  per  cent,  per 
annum  for  the  first  two  years  and  9  per  cent,  per  annum  there- 
after, at  the  same  time  also  offering  to  Edison  Electric  Light 
Company  stockholders  $50  in  cash  and  $100  in  5  per  cent,  col- 
lateral trust  certificates  for  each  share  of  Edison  Electric  Light 
Company  stock.  Nearly  all  the  stockholders  accepted  this 
latter  offer  and  the  trust  certificates  were  issued,  secured  by 
the  deposit  of  the  Edison  Electric  Light  Company  stock  with 
City  Trust  Safe  Deposit  and  Surety  Company  as  trustee.^ 

There  were  20,000  shares  of  Edison  Electric  Light  stock  with 
a  par  value  of  $100  each.  Later  reports  of  Philadelphia  Elec- 
tric Company  show  that  $1,999,900  of  this  stock,  or  all  but 
one  share,  was  finally  secured,  and  that  $1,994,300  of  this 
amount  was  pledged  as  security  for  the  Edison  Electric  Light 
Company  5  per  cent,  collateral  trust  certificates  with  which 
the  payment  was  in  part  made.    The  purchase  thus  necessitated 


» See  Philadelphia  Daily  Stockholder,  February  17,  1896,  and  Commercial  and  Financial 
Chronicle,  February  29,  1896,  p.  415. 


120 

the  payment  for  the  Edison  Electric  Light  stock  of  (1)  $1,999,- 
900  [par  value]  5  per  cent,  collateral  trust  certificates,  and  (2) 
$50  cash  for  each  of  the  19,999  shares  purchased,  or  $999,950. 
This  was  a  total  of  $2,999,850— almost  $3,000,000. 

After  these  transactions  were  completed  the  capitalization  of 
Pennsylvania  Heat,  Light  and  Power  Company  (including 
funded  debt)   was  as  follows: 

Stock: 

Common    $5,000,000 

Preferred  (6  per  cent.) 5,000,000 

Collateral  trust  certificates  (5  per  cent.) 1,999,900 

Total    $11,999,900 

In  May,  1896,  negotiations  were  said  to  be  in  progress  between 
the  Pennsylvania  Heat,  Light  and  Power  Company  and  the 
group  described  above  as  the  "Electric  Trust."  On  May  25 
an  agreement  was  ratified  by  which  the  former  paid  for  the  latter 
at  $130  each  for  the  preferred  certificates  and  $40  each  for  the 
common^  The  total  cost  of  the  purchase  was  $650,000  for  the 
5000  shares  of  preferred  stock  at  $130  each  and  $1,257,600  for 
the  31,440  shares  of  common  stock  at  $40  each,  or  a  total  of 
$1,907,600.  There  was  at  this  time  issued  a  call  for  $20  per 
share  to  be  made  on  the  preferred  stock  of  Pennsylvania  Heat, 
Light  and  Power  Company  to  raise  the  cash  needed.  This  call 
for  cash  brought  the  total  payments  up  to  $35  per  share,  or  70 
per  cent,  of  par  value.  Payments  for  Electric  Trust  stock  were 
to  be  one-fourth  cash  on  June  15th,  and  the  balance  in  three 
instalments,  the  last  of  which  was  due  early  in  1897.  The  call 
on  the  preferred  stock  for  $20  per  share  was  for  four  instalments, 
the  first  due  on  June  15,  1896,  and  the  others  in  September  and 
December,  1896,  and  March,  1897. 

The  structure  of  Pennsylvania  Heat,  Light  and  Power  Com- 
pany at  the  end  of  these  transactions  may  be  represented  as 
follows: 


1  See  Public  Ledger,  May  16,  1896,  and  Commercial  and  Financial  Chronicle,  May  30, 
1896,  pp.  989  and  990. 


121 


Pennsylvania  Heat, 
Light  and  Power 
Company 


1.  Edison  Electric  Light  Company 

a.  Brush  Electric  Light  Company 

b.  United  States  Electric  Lighting 

2.  Electric    Trust        Company 
of  Philadelphia.  I  c.  Northern   Electric    Light    and 

Power  Company  (50  per  cent.) 

d.  Philadelphia  Electric  Lighting 
Company 

e.  Penn  Electric  Light  Company 


As  "Electric  Trust"  was  not  incorporated,  it  was  probably  dis- 
solved.   The  structure  would  then  appear  thus: 


Pennsylvania  Heat, 
Light  and  Power 
Company 


1.  Edison  Electric  Light  Company 

2.  Brush  Electric  Light  Company 

3.  United  States  Electric  Lighting  Company 

4.  Northern  Electric  Light  and  Power  Company  (5  per 

cent.) 

5.  Philadelphia  Electric  Lighting  Company. 

6.  Penn  Electric  Light  Company 


To  the  above  list  there  should  perhaps  be  added  Columbia 
Electric  Light  Company,  incorporated  in  Pennsylvania  on 
November  23,  1892,  with  an  authorized  capital  of  $100,000  (1000 
shares  at  par  of  $100  each)  of  which  663  shares,  or  $66,300,  were 
issued  full  paid.  Also  there  were  $30,000  of  5%  P^r  cent,  ten 
year  bonds  due  March  1,  1903,  of  which  $2000  were  in  the  sink- 
ing fund  and  $28,000  outstanding  in  1902.  The  entire  issue  of 
bonds  was  owned  by  Pennsylvania  Heat,  Light  and  Power 
Company.^ 

Perhaps  a  summary  at  this  point  will  be  helpful.  Companies 
had  been  consolidated  and  their  stock  held  by  Pennsylvania 
Heat,  Light  and  Power  Company  as  follows.  The  amounts 
acquired  are  as  given  in  the  report  to  the  Stock  Exchange  in 
1902. 


Statement  of  Philadelphia  Electric  Company  to  Stock  Exchange  in  1902. 


122 

Edison  Electric  Light  Company $1  999  900 

Brush  Electric  Light  Company 1  000  000 

United  States  Electric  Lighting  Company 1  000  000 

Philadelphia  Electric  Lighting  Company 50  000 

Northern  Electric  Light  and  Power  Company 325  000 

Penn  Electric  Light  Company. 618  486 

$4  993  386 
Adding  Columbia  Electric  Light  Company's  $66  300 

stockand$30  OOObonds 96  300 

$5  089  686 

These  securities,  aggregating  a  par  value  of  $5,089,686,  were 
acquired  for  a  total  in  cash  and  trust  certificates  of  $2,999,850 
for  the  Edison  and  $1,907,600  for  the  "Electric  Trust"  group,  a 
total  of  $4,907,450.  As  an  offset  against  the  securities  thus 
acquired  there  were  issued  securities  of  Pennsylvania  Heat, 
Light  and  Power  Company  as  follows: 

Stock: 

Preferred  (Par  $5,000,000—70  per  cent,  paid) . .  $3,500,000 

Common 5,000,000 

Collateral  trust  certificates  (5  per  cent.) 1,994,300 

$10,494,300 

These  changes  are  very  important.  By  them  there  had  been 
i)rought  together  six  or  perhaps  seven  separate  companies.  Aside 
from  any  consequences  that  might  arise  from  the  monopolistic 
situation  thus  created  there  had  come  about  a  large  increase  in 
the  amount  of  outstanding  securities.  The  extent  of  this  increase 
may  be  stated  with  some  accuracy. 

We  have  just  noted  that  there  had  been  brought  into  the  con- 
solidation full  paid  stock  and  bonds  of  these  companies  to  the 
amount  of  $5,089,686.  We  have  also  observed  that  not  all  of 
this  represented  an  actual  investment  in  the  properties.  Brush 
Electric  Light  Company  had  issued  $800,000  of  its  $1,000,000  of 
stock  in  return  for  patents,  no  more  than  $200,000  being  invested 
in  other  forms;  United  States  Electric  Lighting  Company  had 
issued  $950,000  for  patents  and  only  $50,000  for  cash;  and  Penn 
Electric   Light   Company   had,   according   to   the  testimony   of 


123 

William  D.  Marks  cited  above,  invested  only  about  $10,000,  the 
occasion  for  issuing  the  remainder  of  the  stock  not  being  clear. 
No  information  is  at  hand  regarding  the  other  companies. 

Assuming  an  investment  of  cash  except  where  there  is  evidence 
to  the  contrary,  we  might  summarize  the  original  investments  in 
the  property  (other  than  patents)  thus: 

Edison  Electric  Light  Company $1  999  900 

Brush  Electric  Light  Company 200  000 

United  States  Electric  Lighting  Company 50  000 

Philadelphia  Electric  Lighting  Company 50  000 

Northern  Electric  Light  and  Power  Company 325  000 

Penn  Electric  Light  Company 10  000 

Columbia  Electric  Light  Company 96  300 

Total $2  731  200 

The  stock  of  the  Edison  Company  includes  that  issued  for 
patents.  Just  how  much  should  be  allowed  for  the  Brush  Elec- 
tric Light  Company  and  United  States  Electric  Lighting  Com- 
pany patents  it  is,  of  course,  difficult  to  decide,  but  we  shall 
perhaps  be  generous  if  we  add  $200,000  in  each  case,  or  a  total  of 
$400,000.    This  would  raise  the  $2,731,200  to  $3,131,200. 

That  there  had  actually  been  relatively  little  cash  originally 
invested  in  the  properties  is  borne  out  by  the  report  of  Chair- 
man Losch  of  the  Legislative  Committee  previously  mentioned. 
In  it  there  is  this  assertion: 

When  the  representative  of  the  Electric  Trust  was  upon  the  stand 
for  a  witness  he  was  asked  if  the  trust  has  been  organized  for  the 
purpose  of  establishing  a  monopoly.  He  denied  that  it  was  intended 
to  form  a  monopoly  and  alleged  that  it  was  formed  for  the  purpose  of 
supplying  additional  capital  for  the  operations  of  the  companies 
controlled  by  the  Trust,  which  had  exhausted  their  capital  principally 
by  issuing  it  full  paid  for  patents. 

In  exchange  for  securities  that  seem  to  represent  an  invest- 
ment of  no  more  than  $3,131,200,  there  was  given  $2,907,550  in 
cash  ($999,950  for  Edison  stock  and  $1,907,600  for  Electric  Trust 
certificates)  and  $1,999,900  in  5  per  cent,  certificates  of  the  new 
company.  Of  the  $3,500,000  cash  that  was  paid  in  on  the  Penn- 
sylvania Heat,  Light  and  Power  Company  preferred  stock  there 


124 

was  left  about  $600,000.  In  other  words,  property  worth  approx- 
imately $3,131,200  had  been  acquired  and  an  additional  $600,000 
in  cash  was  presumably  on  hand,  the  two  combined  being 
$3,731,200.  Liabilities  had  been  assumed  as  already  noted  to 
the  sum  of  $10,494,300.  The  difference  between  them  is  $6,763,- 
100.  Here,  as  elsewhere,  we  should  not  ignore  the  possibility 
that  a  considerable  part  of  the  earnings  of  these  companies  may 
have  been  reinvested  in  their  plants.  On  this  point,  however, 
the  writer  has  no  information. 

Another  way  of  stating  what  had  occurred  is  to  point  out 
that,  prior  to  the  consolidation  we  have  just  explained,  this  group 
of  companies  had  no  fixed  charges  to  meet  with  the  exception 
of  the  interest  on  the  $30,000  of  5%  per  cent,  bonds  of  the 
Columbia  Electric  Light  Company.  This  charge  was  $1650  per 
year.     In  the  consolidation  there  had  been  issued  $1,994,300  of 

5  per  cent,  trust  certificates.  Interest  on  this  is  $99,715  per 
annum  and  was  an  annual  fixed  charge  to  be  met  before  any 
dividends  could  be  paid  on  the  stock  of  the  new  company.    Also 

6  per  cent,  dividends  on  the  $3,500,000  that  had  been  paid  in  on 
the  preferred  stock  added  $210,000  to  be  furnished  from  earn- 
ings before  holders  of  the  common  stock  could  receive  any  return. 
Prior  to  the  consolidation  only  $1650  per  year  stood  ahead  of 
dividends  on  the  common  stock  of  the  companies,  but  after  con- 
solidation there  was  this  same  $1650  interest  on  the  bonds  of  the 
Columbia  Electric  Light  Company,  $99,715  interest  on  the  new 
trust  certificates  and  $210,000  dividends  on  the  preferred  stock, 
or  a  total  of  $311,365  ahead  of  dividends  on  the  common  stock 
of  the  new  company.  The  value  of  the  assets  held  had  increased 
very  little,  but  to  those  uninitiated  in  what  had  occurred  the 
situation  was  changed.  Apparently  the  properties  were  now 
worth  at  least  $10,494,300,  and  charges  for  service  that  would 
permit  a  return  of  5  per  cent,  on  the  trust  certificates  and  6 
per  cent,  on  the  stock  (both  preferred  and  common),  or  a  total 
of  $609,715  per  annum  would  not  be  unreasonable.  This  calls 
for  emphasis  because  the  practice  of  turning  stock  whose  divi- 
dends are  not  a  fixed  charge  into  bonds  (or  certificates)  whose 
interest  is  a  fixed  charge  and  of  then  issuing  a  large  amount  of 


125 

new  stock  was  followed  in  later  consolidations  which  we  are  soon 
to  examine. 

Edison  Electric  Light  Company  had  paid  $147,764  in  cash 
dividends  in  1895.  Companies  comprising  Electric  Trust  had 
been  averaging  3  per  cent,  dividends,  or  $109,320  on  the  $3,644,000 
common  and  preferred  certificates  outstanding.^  These  two  com- 
bined total  $257,084  as  the  annual  dividends  prior  to  the  con- 
solidation. This  may  be  contrasted  with  the  $609,715  now 
needed  to  give  a  "fair"  return  on  the  outstanding  securities. 
Decreased  expenses  or  larger  earnings  seemed  imperative. 

Both  these  results  were  apparently  realized  as  Pennsylvania 
Heat,  Light  and  Power  Company  reported  net  profits  of  $275,194 
for  the  year  ending  September  30,  1896.  Interest  for  6  months  on 
the  trust  certificates  called  for  $49,502  (indicating  about  $1,- 
980,000  of  the  certificates  outstanding  at  that  time)  and  6  per 
cent,  dividends  on  preferred  took  $79,000  more.  (Note  that  the 
dividends  were  at  the  rate  of  6  per  cent,  on  the  amount  paid  in, 
from  time  of  payment  to  October  1,  1896.)  This  left  undivided 
profits  of  $146,692.  In  the  last  nine  months  of  the  period 
$120,000  had  been  spent  on  construction  and  betterments.  For 
the  year  ending  June  30,  1897,  there  was  a  surplus  of  $151,892 
after  dividends  of  6  per  cent,  on  amount  paid  in  and  2  per  cent, 
on  both  preferred  and  common.  Operating  expenses  had 
decreased  $35,309  and  business  showed  an  increase  of  $49,309 
while  $218,749  had  been  spent  for  extensions  and  improvements.^ 
Some  of  these  statements  are  ambiguous,  but  apparently  the 
company  was  prospering. 

PENNSYLVANIA  MANUFACTURING  LIGHT  AND  POWER  COMPANY 

Thus  far  we  have  been  analyzing  only  Pennsylvania  Heat, 
Light  and  Power  Company.  The  next  step  is  to  explain  the 
terms  on  which  it  was  taken  over  by  Pennsylvania  Manufactur- 
ing Light  and  Power  Company.  Pennsylvania  Manufacturing 
Light  and  Power  Company  was  incorporated  in  New  Jersey  on 
February  3,  1898,  and  issued  $15,000,000  of  stock  (300,000 
shares — par  $50),  on  which  10  per  cent,  or  $1,500,000  was  paid. 

1  The  Commercial  and  Financial  Chronicle,  May  30,  1896,  pp.  989-90. 

2  See  Commercial  and  Financial  Chronicle  for  October  31,  1896,  p.  793. 


126 

A  circular  was  at  once  issued  by  its  secretary,  William  P.  Con- 
over,  Jr.,  to  the  stockholders  of  the  Pennsylvania  Heat,  Light 
and  Power  Company  who  had  not  yet  come  into  the  consolida- 
tion, in  which  it  was  announced  that  the  Pennsylvania  Manu- 
facturing Light  and  Power  Company  had  already  "acquired  a 
majority  of  the  shares  of  stock  of  the  Pennsylvania  Heat,  Light 
and  Power  Company  for  a  consideration  payable  in  its  50-year 
5  per  cent,  gold  trust  certificates,  at  the  rate  of  $66  for  each 
share  of  the  preferred  stock  and  of  $24  for  each  share  of  the 
common  stock  with  the  right  to  subscribe  for  one  share  of  the 
stock  of  this  company  of  the  par  value  of  $50  per  share  for  every 
four  shares  of  the  common  or  of  the  preferred  stock  of  the  Penn- 
sylvania Heat,  Light  and  Power  Company  purchased,  upon 
which  subscriptions  an  instalment  will  be  called,  payable  as 
follows:  one-half,  or  $2.50  per  share,  upon  subscription,  and  one- 
half,  or  $2.50  per  share,  when  the  certificates  of  stock  of  this 
company  are  ready  for  delivery.  If  you  desire  to  sell  your  shares 
upon  the  same  terms  the  Pennsylvania  Manufacturing  Light  and 
Power  Company  will  purchase  them  if  deposited  with  the 
Guarantee  Trust  and  Safe  Deposit  Company,  Philadelphia,  on 
or  before  March  Ist".^ 

An  analysis  of  this  offer  is  interesting.  It  will  be  remembered 
that  the  Pennsylvania  Heat,  Light  and  Power  Company  had 
issued  $10,000,000  of  stock,  of  which  $5,000,000  was  preferred 
(at  this  time  70  per  cent,  paid  in) ,  and  $5,000,000  was  common 
full  paid.  At  a  par  value  of  $50  per  share,  this  means  100,000 
shares  of  each  kind  or  a  total  of  200,000  shares.  At  $66  per 
share  for  preferred  and  $24  per  share  for  common  the  cost  (in 
trust  certificates)  would  be  $6,600,000  for  the  preferred  stock 
and  $2,400,000  for  the  common  stock  or  $9,000,000  for  both.  The 
offer  of  the  right  to  subscribe  to  Pennsylvania  Manufacturing 
Light  and  Power  Company  stock  to  the  amount  of  one  share 
(par  $50)  for  every  four  shares  of  Pennsylvania  Heat,  Light 
and  Power  Company  stock  (either  common  or  preferred)  was 
an  offer  of  50,000  of  the  300,000  shares  or  one-sixth  of  the  stock 
of  the  new  company.  Total  par  value  of  these  shares  would 
have  been  $2,500,000,  on  which  10  per  cent.,  or  only  $250,000 

1  Commercial  and  Financial  Chronicle,  February  19,  1898,  pp.  384-5. 


127 

was  to  be  paid  in,  the  remaining  90  per  cent.,  or  $2,250,000  being 
subject  to  call.  No  information  has  been  found  about  the  dis- 
position of  the  remaining  250,000  shares.  There  was  thus  issued 
at  this  time  stock  with  a  par  value  of  $15,000,000  on  which  there 
has  never  been  paid  (so  far  as  the  writer  is  aware)  any  more 
than  the  original  10  per  cent.,  or  $5  per  share — a  total  of 
$1,500,000.  No  more  than  this  amount  had  been  paid  in  by 
1902.1 

Trust  certificates  of  the  Pennsylvania  Manufacturing  Light 
and  Power  Company,  bearing  5  per  cent,  interest,  were  author- 
ized to  the  amount  of  $15,000,000.  Of  these,  $9,000,000  were 
issued  to  pay  for  Pennsylvania  Heat,  Light  and  Power  Com- 
pany stock  and  $4,275,000  later  for  other  purposes  to  be  described 
below.  Later,  $2,000,000  of  these  were  purchased  in  the  open 
market  and,  according  to  the  statement  to  the  Stock  Exchange 
in  1902,  were  destroyed.    This  left  $11,275,000  outstanding. 

The  new  corporation  issued  also  $15,000,000  of  stock.  Fixed 
charges  now  become: 

$1,994,300  Edison  Electric  Light  Stock  Trust  Certifi- 
cates   (5%) $99,715 

$9,000,000  new  5  per  cent,  certificates 450,000 


$549,715 


Prior  to  this  latest  move  annual  fixed  charges  of  $311,365 
stood  ahead  of  dividends  on  common  stock.  Now  there  exist 
fixed  charges  of  $549,715  per  annum  while  $15,000,000  of  new 
stock  has  been  brought  into  existence.  A  return  of  say  6  per 
cent,  per  annum  on  the  $1,500,000  paid  in  on  the  $15,000,000  of 
stock  would  call  for  $90,000  more,  a  total  of  $639,715  to  be 
secured  each  year  over  and  above  operating  expenses. 

1  See  statement  to  Philadelphia  Stock  Exchange. 


128 


Pennsylvania  Man- 
ufacturing Light 
and  Power  Com- 
pany  


Pennsylvania  Heat 
Light  and  Power 
Company 


The  structure  of  the  organization  at  this  time  may  be  pic- 
tured thus: 

1.  Edison  Electric  Light  Company 

2.  Brush  Electric  Light  Company 

3.  United  States  Electric  Lighting 
Company 

4.  Northern    Electric    Light    and 
Power  Company. 

5.  Philadelphia  Electric  Lighting 
Company. 

6.  Penn  Electric  Light  Company 

7.  Columbia  Electric  Light  Com- 
pany 

We  are  now  ready  to  turn  our  attention  to  a  second  group  of 
companies  that  were  not  yet  in  the  consolidation.  They  may  be 
grouped  as  given  in  table  IV.^ 


TABLE  IV 


Names  of 
companies 

Authorized 
capital 

Capital 
issued 

Amount 
"paid  in" 
on    stock 

No.  of 
shares 

Par 
value 

per 
share 

Bonds 

Hamilton     Electric 
Company 

$1  370  000 

250  000 
250  000 
500  000 

250  000 
600  000 
100  000 
250  000 

150  000 

1  000  000 

$1  370  000 

250  000 
250  000 
399  840 

200  000 

599  140 

50  300 

237  600 

125  000 

124  950 

$137  000 

250  000 
250  000 
399  840 

200  000 

599  140 

50  300 

237  600 

125  000 

124  950 

137  000 

25  000 
25  000 
50  000 

25  000 

60  000 

2  000 

25  000 

1  500 

20  000 

$10 

10 
10 
10 

10 
10 
50 
10 

100 

50 

Manufacturers' 
Electric        Com- 
pany   

Diamond     Electric 
Company 

Suburban    Electric 
Company 

Wissahickon    Elec- 
tric   Light   Com- 
pany  

Powelton     Electric 
Company 

Bala  &  Merion  Elec- 
tric Company. . . 

West  End  Electric 
Company 

Germantown   Elec- 
tric  Light   Com- 
pany  

$70  000  (6%) 

Keystone  Light 
&    Power    Com- 
pany  

Totals 

U  720  000 

$3  606  830 

$2  373  830 

1  Data  taken  from  statement  to  Stock  Exchange  in  1902. 


129 

This  group  includes  all  of  the  small  companies  in  Phila- 
delphia that  had  not  previously  been  acquired,  except  the 
Southern  Electric  Light  and  Power  Company  and  Kensington 
Electric  Company.  In  addition  to  the  above  list,  50  per  cent, 
of  the  stock  of  Northern  Electric  Light  and  Power  Company 
had  not  yet  been  acquired  and  it  was  reported^  that  the  holders 
of  this  were  offered  $16  cash  or  $12  in  Hamilton  Electric  Com- 
pany bonds  and  25  shares  of  Hamilton  stock  at  $1  for  each 
share  of  their  holdings.  Some  of  the  stocks  of  the  other  com- 
panies in  the  list  were  alleged^  to  be  much  less  than  full  paid, 
while  others  were  said  to  have  been  issued  in  part  as  stock  divi- 
dends.   The  extent  to  which  this  is  true,  if  at  all,  is  not  clear. 

Payment  for  a  considerable  number  and  perhaps  for  all  of 
these  companies  was  made  in  5  per  cent,  certificates,  a  part  of 
the  amount  authorized  as  described  above.  Of  the  $15,000,000 
authorized,  there  was  at  one  time  outstanding  $13,275,000.  As 
$9,000,000  of  them  was  issued  to  pay  for  Pennsylvania  Heat, 
Light  and  Power  stock,  it  seems  probable  that  the  remainder — 
$4,275,000 — was  issued  to  pay  for  the  stock  of  the  group  just 
given.  Not  all  of  the  stock  of  these  companies  was  secured  or 
at  any  rate  not  all  was  in  the  possession  of  Philadelphia  Elec- 
tric Company  in  1902.  Table  V  shows  the  amount  issued,  the 
amount  acquired  and  the  amount  paid  in  on  that  which  was 
acquired.  To  the  list  as  formerly  given  is  now  added  Northern 
Electric  Light  and  Power  Company,  as  the  remaining  50  per 
cent,  of  its  stock  w^as  now  secured. 


^  Commercial  and  Financial  Chronicle,  April  23,  1898,  p.  811. 
*  Commercial  and  Financial  Chronicle,  January  29,  1898,  p.  237. 


130 
TABLE  V 


Name 

Stock 
issued 

Stock 

acquired  by 

Pa.   M.   L.   & 

P.  Co. 

"Paid  in" 
on  stock 
acquired 

$1  370  000 
250  000 
250  000 
399  840 
200  000 
599  140 
50  300 
237  600 
125  000 
124  950 

$1  369  990 
249  830 
249  700 
399  720 
200  000 
599  140 
50  300 
237  550 
125  000 
124  950 

$136  999 

249  830 

Diamond  Electric  Company 

249  700 

Suburban  Electric  Company 

399  720 

Wissahickon  Electric  Light  Company 

200  000 

Powelton  Electric  Company 

599   140 

50  300 

West  End  Electric  Company 

237  500 

Germantown  Electric  Light  Company 

125  000 

Keystone  Light  and  Power  Company. 

124  950 

Totals 

$3  606  830 
325  000 

$3  606  180 
325  000 

82  373  189 

Northern  Electric  Light  and  Power  Company . . 

325  000 

Totals 

$3  931  830 

«3  931   180 

$2  698  189 

The  terms  of  acquisition  of  these  various  companies  have  been 
ascertained  in  only  two  cases.  Northern  Electric  Light  and 
Power  Company  stock  had  been  selling  in  the  market  at  about 
$13  per  share,  and  was  regularly  receiving  a  dividend  of  $1  per 
share  per  annum,  or  10  per  cent.  The  company  held  its  property 
free  of  debt.  It  was  taken  over  by  the  Pennsylvania  Manufac- 
turing Light  and  Power  Company  at  $20  per  share,  payment 
being  made  in  5  per  cent,  trust  certificates,  the  exchange  calling 
for  $650,000  of  certificates  in  return  for  the  $325,0()0  of  stock.^  It 
is  to  be  observed  that  5  per  cent,  interest  on  $650,000  of  certifi- 
cates is  exactly  the  same  in  amount  as  10  per  cent,  dividends 
on  $325,000  of  stock.  The  only  differences  are  that  it  appears 
less  and  that  as  interest  the  sum  is  a  fixed  charge  of  the  parent 
company. 

The  West  End  Electric  Company  was  taken  over  in  the  same 
manner  as  the  Northern.  Its  stock  issue  was  $237,600  (par  $10 
per  share).  The  price  paid  was  $18  per  share  in  Pennsylvania 
Manufacturing  Light  and  Power  Company  5  per  cent,  certifi- 
cates, the  purchase  price  being    said    to  represent    the  earning 

*  Commercial  and  Financial  Chronicle,  May  28,  1898,  p.  1046. 


131 


capacity  of  the  company  on  a  5  per  cent,  basis.  A  part  of  the 
West  End  stock,  but  not  a  controlling  interest,  was  said  to  have 
been  held  by  the  Pennsylvania  Heat,  Light  and  Power  Com- 
pany and  thus  was  held  by  the  Pennsylvania  Manufacturing 
Light  and  Power  Company,  but  no  conclusive  proof  of  this  is 
at  hand.  To  secure  control  the  purchase  described  above  was 
negotiated.  As  in  the  case  of  other  companies  which  were  ab- 
sorbed, the  purchase  price  was  said  to  represent  earning  capacity 
on  a  5  per  cent,  basis.^ 

The  structure  of  the  organization  we  are  describing  may  now 
be  pictured.  Perhaps  some  of  the  companies  were  acquired  a 
little  later. 

.  Edison  Electric  Light  Company 
.  Brush  Electric  Light  Company 
.  United   States   Electric   Lighting 

I.  Pennsylvania  Company 
Heat,    Light  J  d.  Northern  Electric  Light  and  Power 
and      Power]  Company  (50  per  cent.) 
Company ...     e.  Philadelphia      Electric      Lighting 

Company 

f .  Penn  Electric  Light  Company 

g.  Columbia  Electric  Light  Company 

2.  Hamilton  Electric  Company 

3.  Manufacturers'  Electric  Company 

4.  Diamond  Electric  Company 

5.  Suburban  Electric  Company 

6.  Wissahickon  Electric  Light  Company 

7.  Powelton  Electric  Company 

8.  Bala  and  Merion  Electric  Company 

9.  W^est  End  Electric  Company 
10.  Germantown  Electric  Light  Companj^ 

II.  Keystone  Light  and  Power  Company 
12.  Northern  Electric  Light  and  Power  Company  (50 

per  cent.) 


Pennsylvania  Man 
ufacturing  Light  j 
and  Power  Com 
pany 


Pennsylvania  Manufacturing  Light  and  Power  Company,  now 
the  parent  corporation,  had  outstanding  $15,000,000  stock  (10 
per  cent,  paid)  and  was  responsible  for  interest  on  $1,994,300 
Edison  Electric  Light  5  per  cent,  stock  trust  certificates  and 
$13,275,000  in  5  per  cent,  certificates    (usually  referred  to  as 


1  Commercial  and  Financial  Chronicle,  August  6,  1898,  p.  275. 


132 

Philadelphia  Electric  5  per  cent,  gold  trust  certificates).  These 
certificates  total  $15,269,300.  Adding  this  to  the  $15,000,000 
stock,  we  have  $30,269,300  of  securities  outstanding.  If  we  in- 
clude only  the  amount  paid  in  on  the  stock,  we  get  $16,769,300. 
This  as  we  have  observed  was  issued  in  exchange  for  the  follow- 
ing stock  (including  a  very  few  bonds) : 

Edison  Electric  Light  Company $1,999,900 

Electric   Trust   group 3,089,786 

Hamilton  Electric  Company,  etc 2,698,189 


$7,787,875^ 

The  difference  between  $16,769,300  and  $7,787,875  is  $8,981,- 
425  and  the  difference  between  $30,269,300  and  $7,787,875  is 
$22,481,425. 

These  certificates  had  been  issued  in  return  for  stock.  We 
observed  that  Pennsylvania  Heat,  Light  and  Power  Company 
was  responsible  for  $99,715  fixed  charges  in  the  form  of  interest 
on  the  Edison  5s  it  had  issued.  To  this  must  now  be  added  5 
per  cent,  of  $13,275,000  or  $663,750,  which  gives  a  total  of  $763,- 
465.  A  return  of  say  6  per  cent,  on  the  amount  paid  in  on  the 
stock  (10  per  cent,  or  $1,500,000)  would  add  $90,000,  making  a 
total  of  $853,465  to  be  earned  over  operating  expenses  in  order 
to  pay  interest  on  the  certificates  and  a  return  of  6  per  cent,  on 
the  amount  "paid  in"  on  the  stock. 

The  Pennsylvania  Manufacturing  Light  and  Power  Company 
now  began  to  expand,  absorbing  several  outside  companies,  said 
to  include  one  in  Atlantic  City,  N.  J.,  two  in  Camden,  N.  J.,  and 
one  in  Jamaica,  N.  Y.  These  acquisitions  necessitated  cash, 
and  the  question  of  calling  for  further  payments  on  stock  at  once 
arose  and  differences  of  opinion  appeared  among  the  directors. 
The  condition  of  the  company  at  this  time  and  its  receipts  for 
the  fiscal  year  are  shown  by  the  following  i^ 


1  A  writer  in  the  Philadelphia  Press  of  October  15,  1911  states  that  upon  the  stock  of  a 
number  of  companies  (the  list  being  nearly  the  same  as  the  ones  we  have  given)  there  had 
been  paid  a  total  of  $7,072,622. 

2  Taken  from  Commercial  and  Financial  Chronicle,  February  18,  1899,  p.  328. 


133 

INCOME  ACCOUNT 

(For  11  months  ending  December  31,  1898) 

Receipts  from  all  companies  owned  and  operated $963  157 

Deduct 

11  months'  interest  on  Philadelphia  Electric  5s $596  433 

October  dividend  of  50c.  per  share 148  125       744  558 


Balance,  surplus $218  598 

Additional  receipts,  sales,  securities  and  premiums 765  883 


Total  present  undivided  profits $984  482 

BALANCE  SHEET 

(December  31,  1898) 

Assets  Liabilities 

Charter  and  organization  $11  819         Capital  stock $1  497  829 

Miscellaneous  stock 15  209  956  Philadelphia  Electric  Gold  5s.  .  .      13  206  266 

Loans 26  500         Accounts  payable 79  299 

Cash 19  578  Hamilton     Electric     Company 

Materials 71  922             cash  surplus 60  000 

Furniture,  etc 1  383  Accrued    interest    Philadelphia 

Tools  and  implements 1  033             Electric  Gold  5s 165  619 

Accounts  receivable 19  647         Profit  and  loss 984  483 

Construction  account 235  622 

Miscellaneous  companies .  .  394  036 


$15  993  496  $15  993  496 

Several  items  deserve  notice.  Over  three-fourths  of  the  un- 
divided profits  have  apparently  come  from  other  transactions 
than  the  operations  of  underlying  companies,  the  most  import- 
ant seeming  to  be  dealings  in  securities.  In  the  balance  sheet 
the  assets  are  chiefly  the  securities  of  other  companies.  The 
liabilities  are  chiefly  the  5  per  cent,  gold  trust  certificates  to 
which  we  have  been  referring,  which  are  designated  as  Phila- 
delphia Electric  gold  5s.  It  is  to  be  observed  that  in  spite  of 
the  name  given  them,  they  are  obligations  of  Pennsylvania  Man- 
ufacturing Light  and  Power  Company  and  not  of  Philadelphia 
Electric  Company,  as  the  latter  had  not  yet  been  incorporated. 
The  amount  of  (paid  in)  stock  in  the  above  statement  is  rela- 
tively small,  i.  e.,  only  $1,497,829.  The  $13,206,266^  of  5  per 
cent,  trust  certificates  outstanding  on  that  dat€  placed  on  Penn- 
sylvania Manufacturing  Light  and  Power  Company  an  annual 
interest  charge  of  $660,313.30.    As  shown  by  the  above  income 

*  At  this  time  not  all  of  the  certificates  had  been  issued.     The  amount  was  later  increased 
to  the  $13,275,000  mentioned  in  the  text. 


134 

account  for  the  11  months  ending  Dec.  31,  1898,  the  amount 
actually  paid  for  that  period  was  $596,433.  These  certificates 
were  all  or  at  least  nearly  all  created  by  the  parent  company 
(Pennsylvania  Manufacturing  Light  and  Power  Company)  for 
the  purchase  of  stock.  Stated  differently,  they  were  merely  stock 
in  the  guise  of  bonds.  The  above  income  account  shows  $148,125 
or  50c.  per  share  paid  in  October  dividends,  this  being  at  the 
rate  of  10  per  cent. 

ELECTRIC   COMPANY  OF   AMERICA 

Reference  is  made  above  to  differences  of  opinion  among  the 
directors  regarding  the  proper  policy  to  be  pursued  in  acquiring 
properties  outside  of  Philadelphia.  Apparently  there  was  need 
for  cash  to  make  these  purchases  and  this  could  be  secured  only 
by  assessments  on  the  Pennsylvania  Manufacturing  Light  and 
Power  Company  stockholders.  To  avoid  this  difficulty  the 
Electric  Company  of  America  was  incorporated  early  in  Jan- 
uary, 1899,  at  Trenton,  New  Jersey,  with  an  authorized  capital 
stock  of  $25,000,000—500,000  shares  with  a  par  value  of  $50 
each.  The  Commercial  and  Financial  Chronicle  of  January  14, 
1898  (p.  85),  quotes  the  Philadelphia  Ledger  as  stating  that 
350,000  of  the  authorized  shares  were  to  be  issued  at  once,  the 
balance  of  150,000  to  remain  in  the  treasury  of  the  company.  Of 
the  350,000  shares  issued,  100,000  shares  were  to  go  to  United 
Gas  Improvement  Company,  100,000  to  Pennsylvania  Manufac- 
turing Light  and  Power  Company  and  150,000  shares  to  "the 
organizers  and  other  interests".  Stockholders  of  Pennsylvania 
Manufacturing  Light  and  Power  Company  were  allowed  to  sub- 
scribe to  100,000  of  the  150,000  shares  on  the  basis  of  one  share 
for  three.  Why  these  various  amounts  were  to  be  distributed  in 
this  way,  and  on  what  terms,  is  not  made  clear. 

A  payment  of  10  per  cent,  or  $5  per  share  was  called  at  the 
time  of  subscription.  This  yielded  $1,750,000,  which  was  paid 
to  Pennsylvania  Manufacturing  Light  and  Power  Company  for 
its  properties  located  outside  of  Philadelphia.  As  this  company 
itself  owned  100,000  shares,  it  actually  received  in  cash  only  the 
amount  assessed  on  the  other  250,000  shares,  or  $1,250,000.  This 
sale  of  the  properties  by  the  directors  for  this  amount  ($1,250,000 


135 

cash  and  100,000  shares  of  Electric  Company  of  America  stock, 
10  per  cent,  paid)  was  ratified  by  the  stockholders  and  the 
president  of  Pennsylvania  Manufacturing  Light  and  Power  Com- 
pany was  directed  not  to  acquire  properties  outside  Philadelphia 
without  the  authority  of  the  board.^  Electric  Company  of 
America  at  once  began  negotiations  for  the  acquisition  of 
numerous  properties,  but  we  may  postpone  consideration  of  these 
activities  until  we  have  explained  several  other  movements  of 
importance. 

NATIONAL   ELECTRIC   COMPANY 

When  Philadelphia  Electric  Company  was  organized  on 
October  5,  1899,  it  was  for  the  purpose  of  consolidating  Penn- 
sylvania Manufacturing  Light  and  Power  Company,  which  we 
have  been  describing,  with  National  Electric  Company  to  w^hich 
we  have  as  yet  made  no  reference  but  which  we  must  now 
examine. 

National  Electric  Company  was  incorporated  at  Trenton,  New 
Jersey,  on  May  1,  1899,  with  an  authorized  capital  stock  of 
$25,000,000  (all  common)  with  a  par  value  of  $50  per  share.  Of 
the  500,000  shares  authorized  there  were  apparently  issued  at 
that  time  175,000,  of  which  50,000  were  sold  to  the  public,  the 
remainder  presumably  being  retained  by  the  promoters  of  the 
new  organization.  Ten  dollars  per  share  (20  per  cent.)  was 
paid  in  and  the  public  was  said  to  have  paid  $10.50  for  the 
shares  sold.    By  1902  the  stock  was  25  per  cent.  paid. 

Several  companies  were  promptly  turned  over  to  National 
Electric  Company,  but  on  what  terms  is  not  stated.  Those 
secured  first  were  Beacon  Light  Company  of  Chester  (which 
had  leased  Chester  Electric  Light  and  Power  Company) ;  Over- 
brook  Electric  Company;  and  Cheltenham  Electric  Light,  Heat 
and  Power  Company.  Beacon  Light  Company  had  an  exclusive 
street  lighting  contract  for  Chester  till  1902;  also  one  with  the 
Borough  of  Upland  and  one  with  the  Borough  of  Ridley  Park, 
the  latter  contract  running  for  five  years.  The  lease  .by  Beacon 
Light  Company  of  Chester  Electric  Light  and  Power  Company 
is  for  999  years  from  October  30,  1896,  and  guarantees  7  per 

1  Commercial  and  Financial  Chronicle,  February  18,  1899,  p.  328. 


136 

cent,  yearly  on  its  $132,450  stock  and  interest  on  its  $100,000 
of  20-year  sinking  fund  5  per  cent,  bonds  due  March  1,  1916. 
In  1902  Delaware  County  Trust  Company  was  trustee  for  this 
bond  issue,  the  sinking  fund  at  that  date  amounting  to  $16,750. 
Fixed  annual  charges  (interest  and  rental)  thus  assumed  by 
Beacon  Light  Company  amount  to  $14,271.50.^ 

Beacon  Light  Company  had  in  1912  an  authorized  capital 
stock  of  $120,000  which  was  increased  to  $1,500,000  in  1913.  Of 
this  amount  $1,300,000  was  outstanding  on  December  31,  1913, 
the  majority  of  it  being  held  by  Philadelphia  Electric  Company 
(presumably  through  National  Electric  Company). 

Acquisition  of  Southern  Electric  Light,  Heat  and  Power  Com- 
pany (incorporated  in  1890)  came  next.  It  was  said  that  a 
meeting  of  the  stockholders  of  this  company  was  held  on  Novem- 
ber 23,  1898,  at  which  it  was  voted  to  increase  the  stock  of  that 
company  from  $400,000  to  $2,000,000.  In  1902  the  authorized 
issue  was  $2,000,000.  Of  this  $500,000  was  outstanding,  of  which 
$498,800  was  acquired  by  National  Electric  Company.  Sale  of 
the  property  to  National  Electric  Company  was  said  to  have 
been  for  $2,500,000  in  cash.^ 

Apparently  to  meet  this  expense  the  directors  of  National 
Electric  Company  on  May  31,  1899,  authorized  the  issue  of 
175,000  shares  of  stock  in  addition  to  the  175,000  already  issued, 
$10  per  share  to  be  paid.  Total  issues  of  National  Electric  stock 
to  this  point  were  350,000  shares  on  which  $3,500,000  had  been 
paid.  The  last  issue  yielded  $1,750,000,  which  would  have  paid 
all  but  $750,000  of  the  amount  needed  to  purchase  the  Southern 
Electric  Light  and  Power  Company  stock  at  the  price  of 
$2,500,000  just  given.  In  1902  National  Electric  Company  stock 
was  25  per  cent,  paid  in  {i.  e.,  $12.50  on  each  $50  share) .  The 
organization  of  National  Electric  Company  may  be  represented 
thus : 

f  1.  Southern  Electric  Light  and  Power  Company 
National    Electric  I  t  •  i..  r>.  /    Chester    Electric   Light 

Company   (New|  ^'  beacon  Light  Company  >^      ^^^  p^^^^  ^^^^^^^ 

3.  Overbrook  Electric  Company 

4.  Cheltenham  Electric  Light,  Heat  and  Power  Com- 
pany 

1  Report  to  Stock  Exchange  in  1902. 

'  Commercial  and  Financial  Chronicle,  June  3,  1899,  p.  1077. 


Jersey,     May     1, 
1899) 


137 


The  various  companies  taken  over  and  the  important  facts  as 
to  capitalization,  etc.,  are  given  in  table  VI. 

TABLE  VI 


Names  of  companies 

Capital 
authorized 

Capital 
issued 

"Paid  in" 

on  stock 

issued 

No.  of 

shares 

authorized 

Par 
value 

per 
share 

Southern  Electric  Light  and  Power 
Company 

$2  000  000 

120  000 

10  000 

50  000 

$500  000 

115  250 

10  000 

50  000 

$500  000 

115  250 

10  000 

50  000 

200  000 

1  200 

100 

5  000 

$10 
100 

Overbrook  Electric  Company 

Cheltenham  Electric  Light,  Heat 
&  Power  Company 

100 
10 

Totals 

$2  180  000 

$675  250 

$675  250 

Of  the  amounts  issued  there  were  secured  the  following  as  in- 
dicated by  the  statement  to  the  Stock  Exchange  in  1902: 

Stock  acquired 

Southern  Electric  Light  and  Power  Company $498  800 

Beacon  Light  Company 115  250 

Overbrook  Electric  Company 10  000 

Cheltenham  Electric  Light,  Heat  and  Power  Company.  49  990 

Total $674  040 

Very  little  information  is  available  about  these  properties. 
There  are  probably  more  rumors  about  the  issue  of  stock  in 
return  for  ''political  influence",  and  more  assertions  of  improper 
financing  in  connection  with  the  organization  of  National  Elec- 
tric Company  than  in  any  of  the  others  we  have  discussed.  A 
report  that  $2,500,000  in  cash  was  paid  for  the  Southern  is  men- 
tioned above,  but  no  other  references  substantiate  this  rumor. 
All  that  we  can  say  is  that  stock  with  a  "paid  in"  value  amount- 
ing to  $674,040  was  acquired.  With  the  stock  of  the  Beacon 
Light  Company  was  assumed  a  rental  charge  of  $14,271.50  which, 
if  capitalized  at  5  per  cent.,  is  equivalent  to  an  additional 
$285,430  of  capital  or  a  total  of  $959,470.  National  Electric 
Company  issued  $17,500,000  of  its  $25,000,000  authorized  cap- 


138 

ital,  and  there  was  "paid  in"  $12.50  on  each  $50  share,  or 
$4,375,000.  The  difference  between  this  amount  and  $959,470  is 
$3,415,530.  This  represents  the  increase  in  outstanding  secur- 
ities resulting  from  the  consolidation. 

PHILADELPHIA  ELECTRIC   COMPANY 

Philadelphia  Electric  Company  was  now  formed  to  consoli- 
date Pennsylvania  Manufacturing  Light  and  Power  Company 
and  National  Electric  Company.  It  was  incorporated  at  Tri- 
ton, New  Jersey,  on  October  5,  1899,  and  authorized  to  issue 
$25,000,000  of  stock  (par  $25),  on  which  there  was  called  $2.50 
per  share  which  would  furnish  a  working  capital  of  $2,500,000. 
Arrangements  were  at  once  made  for  an  issue  at  par  of  $17,- 
500,000  fifty  year  4  per  cent,  gold  collateral  trust  certificates. 
Of  these  a  part  (not  to  exceed  $15,050,000)  was  to  be  used  to 
purchase  the  stock  of  Pennsylvania  Manufacturing  Light  and 
Power  Company  and  National  Electric  Company,  the  balance 
of  the  certificates  ($2,450,000)  being  retained  "for  the  acquisi- 
tion of  other  electric  properties  in  the  City  of  Philadelphia  and 
counties  adjacent  thereto."^ 

National  Electric  Company  stock  comprised  350,000  shares 
each  now  $12.50  paid  (par  $50),  $2.50  per  share  having  been 
called  for  some  purpose  not  ascertained  to  be  paid  by  October 
16,  1899.  This  call  furnished  $875,000  (350,000  times  $2.50). 
For  each  of  these  shares  Philadelphia  Electric  Company  paid 
$13  at  par  in  the  4  per  cent,  trust  certificates  mentioned  above, 
the  National  Electric  shares  to  be  assigned  to  Philadelphia  Elec- 
tric Company  and  deposited  with  Equitable  Trust  Company, 
Philadelphia,  as  trustee,  on  or  before  November  1,  1899,  as 
security  for  the  $4,550,000  certificates  issued  against  them.  For 
each  share  of  National  Electric  Company  stock  sold  the  vendors 
thereof  were  entitled  to  subscribe  to  two-thirds  of  a  share  of 
Philadelphia  Electric  Company  stock,  paying  thereon  $2.50  per 
share  (10  per  cent.)  by  November  1,  1899. 

For  the  300,000  shares  of  Pennsylvania  Manufacturing  Light 
and   Power    Company   stock    ($5   paid — $50   par)    there    was 

1  Commercial  and  Financial  Chronicle,  October  14,  1899,  p.  797  and  October  21,  1899, 
p.  853. 


139 

offered  $35  at  par  of  the  4  per  cent,  trust  certificates — a  total 
of  $10,500,000  in  certificates,  if  all  the  stock  had  been  secured. 
One  account  (Commercial  and  Financial  Chronicle,  October  14, 
1899,  p.  797j  states  that  these  stockholders  were  given  the 
same  right  to  subscribe  to  Philadelphia  Electric  stock  as  were 
those  of  National  Electric  Company.  All  of  the  National 
Electric  stock  was  bought  and  $14,994,100  or  all  but  $5900  of 
Pennsylvania  Manufacturing  Light  and  Power  Company  stock. 
The  total  cost  in  certificates  was  $15,045,870.  Since  1901  there 
have  been  only  $15,014,142  outstanding,  the  difference  in 
amounts  perhaps  arising  through  the  purchase  of  some  of  them 
in  the  market  by  Philadelphia  Electric  Company  or  perhaps 
through  the  purchase  of  part  of  the  stock  in  some  other  manner. 

An  analysis  of  this  transaction  shows  a  large  increase  in 
securities  outstanding  and  in  fixed  charges  assumed.  On  Na- 
tional Electric  Company's  $17,500,000  stock  there  had  been 
''paid  in"  $4,375,000.  For  this  there  was  substituted  $4,550,000 
of  4  per  cent,  certificates,  an  increase  of  $175,000  and  the 
creation  of  an  annual  fixed  charge  of  $182,000  interest  on  these 
certificates.  The  price  paid  for  Pennsylvania  Manufacturing 
Light  and  Power  Company  was  much  more  excessive.  We  have 
already  observed  that  this  corporation  seems  to  have  been 
overcapitalized  b}^  about  $8,981,425.  On  each  $50  share  of  its 
stock  there  had  been  paid  in  only  $5,  but  this  stock  was  now 
purchased  by  Philadelphia  Electric  Company  at  $35  per  share. 
This  adds  $30  per  share  or  a  total  of  $8,996,460  for  the  299,882 
shares  secured.  Adding  this  to  $8,981,425  we  get  a  total  of 
$17,977,885.  Including  the  $175,000  excess  just  calculated  as 
arising  in  connection  with  the  purchase  of  National  Electric 
Company  we  have  a  total  of  $18,152,885. 

From  this  time  until  in  1902  there  are  two  movements  of 
interest  recorded.  One  is  the  growth  of  Electric  Company  of 
America,  whose  organization  is  described  above.  Created  to 
take  over  properties  outside  of  Philadelphia,  it  began  a  period 
of  rapid  expansion  and  by  February,  1902,  was  said  to  own  and 
operate  sixteen  companies.  The  general  financial  policy  seems 
to  have  been  to  pay  cash  secured  by  assessments  on  its  own 


140 

stock.  There  had  been  $25,000,000  authorized  at  the  time  of 
incorporation  (500,000  shares — par  $50)  of  which  350,000 
shares  were  issued  on  which  10  per  cent,  or  $5  per  share  was 
paid  in.  This  was  brought  up  to  $10  by  several  assessments 
and  by  taking  $1.50  per  share  from  surplus.  Then  the  stock 
was  made  full  paid  by  reducing  the  capitalization  from 
$25,000,000  to  $5,000,000. 

Very  few  details  are  given  showing  the  terms  on  which  vari- 
ous properties  were  bought  and  sold,  and  as  it  was  sold  a  few 
years  later  to  General  Electric  interests  we  need  not  give  the 
details  of  its  history.  The  income  accounts  and  balance  sheets 
of  this  company  from  1899  to  1905,  inclusive,  are  given  in 
Appendix  A. 

THE  PHILADELPHIA  ELECTRIC   COMPANY 

The  second  important  incident  was  the  formation  in  October, 
1902,  of  The  Philadelphia  Electric  Company.  It  was  incor- 
porated in  Pennsylvania  with  an  authorized  capital  stock  said 
to  be  $100,000,^  as  a  subsidiary  holding  company  to  take  over 
the  stocks  of  the  operating  companies  of  Philadelphia  Electric 
Company.  The  purpose  as  given  in  the  annual  report  of  Phila- 
delphia Electric  Company  for  the  year  ending  December  31, 
1902,  was  as  follows: 

During  the  year  your  management  decided  to  ask  for  needed 
legislation  from  the  City  of  Philadelphia  which  would  enable  them  to 
operate  all  the  companies  as  a  unit  and  simplify  the  organization,  it 
being  necessary  under  the  then  existing  legislation  to  operate  each 
company  separately  within  the  territorial  limits  of  its  ordinance.  To 
this  end  The  Philadelphia  Electric  Company  was  created,  and  a  char- 
ter applied  for  and  granted  under  the  laws  of  the  State  of  Penn- 
sylvania. 

An  ordinance  was  introduced,  giving  to  this  Pennsylvania  corpora- 
tion (which  is  owned  by  your  company)  the  right  to  erect  and  main- 
tain a  system  of  electrical  conductors,  overhead  and  underground, 
throughout  the  entire  city  and  the  further  right  to  acquire  by  purchase 
lease  or  otherwise,  the  existing  electric  Hght  companies,  owned  and 
controlled  by  your  company.  Under  this  charter  and  the  provisions 
of  this  ordinance,  it  is  the  purpose  to  leave  all  these  underlying  com- 
panies, and  to  operate  them  under  the  name  of  The  Philadelphia 


1  Commercial  and  Financial  Chronicle,  November  1,  1902,  p.  984. 


141 

Electric  Company.  This  plan  will  in  no  wise  disturb  the  securities 
which  have  been  issued,  nor  afifect  the  rights  and  privileges  of  the 
underlying  companies;  nor  will  it  disturb  in  principle  the  relations 
existing  between  the  holding  and  the  subsidiary  companies  but 
merely  in  such  details  in  management  and  organization  as  are  neces- 
sary to  carry  out  the  plan. 

What  subsidiaries  were  leased  to  this  new  company,  and  on 
what  terms,  is  not  stated  nor  are  any  further  facts  regarding 
the  relations  between  The  Philadelphia  Electric  Company  (of 
Pennsylvania)  and  Philadelphia  Electric  Company  (of  New 
Jersey)  given. 

The  capital  stock  of  The  Philadelphia  Electric  Company  (of 
Pennsylvania)  was  increased  in  1903  but  the  new  amount  is 
not  stated.  Some  of  this  stock  was  issued  to  Philadelphia  Elec- 
tric Company  (of  New  Jersey)  in  return  for  monies  advanced 
for  the  construction  of  the  new  Christian  Street  station  to  date. 
Leases  of  subsidiaries  to  The  Philadelphia  Electric  Company 
(of  Pennsylvania)  were  for  five  years,  took  effect  on  January 
1,  1904,  and  at  their  expiration  they  were  renewed  for  another 
five  years  on  the  same  terms  and  conditions.^  This  renewal 
expired  on  January  1,  1914,  but  the  report  of  Philadelphia 
Electric  Company  for  1914  says  nothing  regarding  a  second 
renewal.  On  December  31,  1907,  Philadelphia  Electric  Com- 
pany (of  New  Jersey)  owned  15,200  shares  of  The  Philadelphia 
Electric  Company  (of  Pennsylvania),  listing  them  at  $1,520,000. 
The  reports  for  1913  and  1914  show  an  increase  to  169,985 
shares — also  an  increase  in  the  holdings  of  common  shares  of 
Delaware  County  Electric  Company  from  2500  to  7500  and  of 
Beacon  Light  Company  from  540  to  12,387%.  No  information 
has  been  secured  concerning  the  significance  of  these  changes 
but  it  seems  probable  that  the  stock  was  issued  in  settlement 
of  advances  made  by  the  parent  company. 

In  August,  1900,  it  was  rumored  that  Philadelphia  Electric 
Company  (of  New  Jersey)  was  buying  its  own  4  per  cent, 
bonds  in  the  market,  funds  for  this  purpose  having  been  secured 
by  a  call  on  stockholders  for  $2.50  per  share,  payable  in 
November,  1900,  and  January,  1901.     It  was  further  rumored 


^  See  varioua  reports  of  Philadelphia  Electric  Company. 


142 

that  the  purchase  of  these  bonds  started  at  63  and  that  prices 
were  limited  to  around  70.  At  an  average  price  of  66  the  com- 
pany would  thus  have  secured  $2,000,000  of  bonds  (or  certifi- 
cates) for  $1,320,000  and  also  have  cut  down  interest  charges 
by  $80,000  per  annum.  The  bonds  apparently  were  not  at  once 
cancelled,  but  were  held  in  the  treasury.  Early  in  1902  they 
were  used  as  collateral  for  a  loan  to  secure  funds  for  the 
purchase  of  Kensington  Electric  Company  for  which  $750,000 
in  cash  was  said  to  have  been  paid.^  Then  another  assessment 
on  Philadelphia  Electric  Company  (of  New  Jersey)  stock 
secured  funds  to  repay  the  loan  and  release  the  bonds.^ 

Reference  has  already  been  made  to  the  purchase  by  Phila- 
delphia Electric  Company  of  $2,000,000  of  the  5  per  cent. 
Philadelphia  Electric  certificates  of  which  there  were  a  total 
of  $13,275,000  outstanding.  These  $2,000,000  were  bought  in 
the  market  and  by  an  agreement  between  Philadelphia  Electric 
Company  and  Land  Title  and  Trust  Company,  trustee,  the 
amount  of  liability  for  this  issue  of  certificates  was  reduced  to 
$11,275,000. 

The  period  of  rapid  expansion  and  of  formation  of  new  cor- 
porations ended  with  the  transactions  above  described.  In  the 
last  few  years  the  changes  in  organization  have  not  been  so 
striking. 

One  of  the  most  important  movements  has  to  do  with  Elec- 
tric Company  of  America.  In  1903  there  was  some  discussion 
of  a  plan  to  raise  the  stock  from  a  par  of  $10  per  share  to  the 
former  $50  with  the  thought  that  it  would  thereby  become 
better  collateral,  but  there  is  no  evidence  that  this  was  done. 

In  1906  the  $4,486,645  stock  of  Electric  Company  of  America 
was  sold  to  American  Gas  and  Electric  Company  at  $14  per 
$10  share,  payment  being  made  in  100-year  5  per  cent,  col- 
lateral trust  bonds  of  the  new  corporation.  There  was  also 
offered  to  Electric  Company  of  America  stockholders  the  right 
to  subscribe  to  preferred  stock  and  a  bonus  of  40  per  cent,  in 
common  stock.  For  this  purchase  an  issue  of  $6,282,000  certifi- 
cates was  necessary.     These  5  per  cent,   certificates   gave   to 

1  Commercial  and  Financial  Chronicle,  January  18,  1902,  p.  156. 

»  Commercial  and  Financial  Chronicle,  August  18,  1900,  p.  346  and  August  25,  1900,  p.  393 


143 

their  holders  the  equivalent  of  a  7  per  cent,  dividend  on  the 
stock  they  formerly  held.  American  Gas  and  Electric  Com- 
pany was  a  subsidiary  of  Electric  Bond  and  Share  Company 
of  New  York  which  was  in  turn  controlled  by  General  Electric 
Company.  A  comparison  of  income  accounts  and  balance  sheets 
of  Electric  Company  of  America  for  the  years  1899-1905,  in- 
clusive, is  attached  as  Appendix  A.  Early  in  1905,  S407,865 
of  new  stock  (a  10  per  cent,  increase)  had  been  offered  to  stock- 
holders at  par,  raising  the  stock  issue  to  the  $4,486,645  given 
above.^ 

Late  in  1903  Philadelphia  Electric  Light  Company,  a  sub- 
sidiary of  Philadelphia  Electric  Company,  filed  notice  of  an 
increase  in  its  authorized  stock  issue  from  $100,000  to 
$2,500,000.= 

In  1904  a  transaction  was  planned  in  which  Keystone  Tele- 
phone Company  was  to  sell  its  conduits  to  Philadelphia  Elec- 
tric Company  for  $2,500,000  cash,  the  telephone  company  to 
rent  these  conduits  for  $125,000  per  annum.  This  was  not 
done,  as  Commonwealth  Electric  Company  offered  to  pay 
$3,000,000  and  charge  only  $100,000  rental.-^ 

In  1904  there  were  rumors  of  a  merger  of  Philadelphia  Elec- 
tric Company  with  L'nited  Gas  Improvement  Company.  The 
plan  as  outlined  in  the  Public  Ledger  of  April  13,  1904,  in- 
cluded a  call  for  $2.50  per  share  on  Philadelphia  Electric  stock, 
making  it  $10  paid,  the  $2,500,000  thus  secured  to  be  applied 
to  retiring  a  part  of  the  Philadelphia  Electric  4  per  cent,  cer- 
tificates. United  Gas  Improvement  Company  was  to  guarantee 
the  principal  and  interest  of  the  remainder.  Two  propositions 
to  stockholders  were  under  consideration:  (a)  a  guarantee  of 
6  per  cent,  on  a  par  value  of  $10  per  share,  or  (b)  an  exchange 
of  Philadelphia  Electric  stock  for  United  Gas  Improvement 
stock  in  such  proportion  as  to  accomplish  the  same  result  as 
in  (a>.    This  plan  did  not  materialize."^ 


1  Commercial  and  Financial  Chronicle,  November  25,  1905,  p.  1552. 
'  Commercial  and  Financial  Chronicle,  December  5,  1903,  p.  2162. 
'  Commercial  and  Financial  Chronicle,  Vol.  79,  p.  2591. 
*  Public  Ledger,  April  13,  1904,  p.  3. 


144 

In  1910  control  of  Delaware  County  Electric  Company  was 
purchased  from  Associated  Gas  and  Electric  Company  of  New 
York,  the  terms  not  being  given.^  Both  common  and  preferred 
stock  was  secured.  This  company  has  been  authorized  to 
issue  $1,150,000  common  and  $250,000  six  per  cent,  cumulative 
preferred  stock,  of  which  there  was  outstanding  on  December 
31,  1913,  $750,000  common  and  $250,000  preferred.  There 
have  also  been  authorized  $750,000  first  mortgage  5  per  cent, 
bonds,  of  which  $300,000  was  outstanding  on  the  same  date. 
The  company  is  a  merger  of  Media  Electric  Light,  Heat  and 
Power  Company,  Philadelphia  Suburban  Electric  Company, 
Faraday  Heat,  Light  and  Power  Company,  and  Citizens'  Elec- 
tric Light  and  Power  Company  of  Delaware  County.  The 
relations  between  these  four  and  Delaware  County  Electric 
Company  are  not  stated. 

In  1913  the  United  Gas  Improvement  Company  offered  to 
lease  Philadelphia  Electric  Company  for  99  years  at  8  per  cent, 
per  annum  on  the  latter  company's  paid-up  capital  of  $17,- 
500,000,  to  provide  for  refunding  its  4  per  cent,  and  5  per  cent, 
certificates  and  to  furnish  funds  for  extension  and  improve- 
ment of  property  without  calling  for  more  payments  by  Phila- 
delphia Electric  Company  stockholders.  This  offer  was  refused 
by  the  Philadelphia  Electric  Company's  board  of  directors.^ 

In  1914  an  agreement  was  made  with  the  Keystone  Tele- 
phone Company  which  is  described  as  follows  in  the  annual 
report  of  Philadelphia  Electric  Company  for  1914: 

With  a  view  to  extending  its  underground  system,  your  Philadel- 
phia Company  has  entered  into  an  agreement  subject  to  the  approval 
of  the  Public  Service  Commission  of  Pennsylvania,  with  the  Keystone 
Telephone  Company  of  Philadelphia,  for  the  use  of  all  of  the  unused 
ducts  in  their  conduit  system  not  needed  for  the  requirements  of  their 
business  for  a  period  of  twenty-one  years,  with  renewal  privileges  of 
two  periods  of  fifteen  years  each.  The  rental  price  to  be  paid  is  four 
cents  per  duct  foot  per  annum — the  minimum  rental  for  the  first  year 
being  $25,000  with  an  ascending  scale  of  annual  minimum  rentals  for 
seven  years  until  the  sum  of  $100,000  is  reached,  which  thereafter  shall 
be  the  annual  minimum  rental  for  the  first  two  periods.  Under  the 
terms  of  the  agreement,  your  Philadelphia  Company  has  the  right  to 

1  Commercial  and  Financial  Chronicle,  April  16  .1910,  p.  1047. 
« Idem,  February  22,  1913,  p.  557. 


145 

purchase  these  ducts  at  the  expiration  of  either  of  the  first  two  periods, 
the  price  to  be  fixed  by  arbitration  as  provided  for  in  the  agreement. 
If,  for  any  reason  the  purchase  of  the  ducts  cannot  be  made,  the 
agreement  provided  that  the  Philadelphia  Company  shall  have  the 
option  of  extending  the  lease  for  a  further  period  of  fifteen  years,  at 
an  annual  minimum  rental  for  such  extended  period  of  $125,000.  It 
is  the  purpose  to  utilize  these  conduits  whenever  they  can  be  used  to 
advantage  in  conjunction  with  the  present  distributing  system. 

We  may  now  picture  (see  table  VII)  the  organization  of 
Philadelphia  Electric  Company  (of  New  Jersey)  as  it  seems 
to  stand  at  the  present  time.  No  attempt  has  been  made  to 
include  the  holdings  of  stock  of  a  number  of  companies  whose 
general  relation  to  this  history  seems  of  little  importance.  An 
illustration  of  this  is  the  ownership  of  seven  shares  of  Westing- 
house  Electric  and  Manufacturing  Company  stock.  Part  of 
the  securities  of  the  companies  we  have  listed  are  held  in  the 
treasury  of  Philadelphia  Electric  Company  and  part  are 
pledged  with  The  Land  Title  and  Trust  Company  as  trustee 
for  the  Philadelphia  Electric  Gold  Trust  Certificates  and  with 
the  Fidelity  Trust  Company  as  trustee  for  The  Edison  Electric 
Gold  Trust  Certificates. 


146 


TABLE  VII 

CHART  OF  PHILADELPHIA  ELECTRIC  COMPANY  OF  NEW  JERSEY  AND  ITS 

SUBSIDIARIES 

'  Edison  Electric  Light  Company  (1886) 
Pennsylvania     Brush  Electric  Light  Co.  (1881) 

Heat, Light     United  States  Electric  Light  Co.  (1881) 
and  Power  J  Phila.  Electric  Lighting  Co.  (1882) 
Company  J  Columbia  Electric  Light  Company  (1892) 
(Penna.1895)      Northern  Electric  Light  and  Power  Co.   50 
per  cent.   (1885) 
[Penn  Electric  Light  Co.  (1887) 
Hamilton  Electric  Co.  (1896) 
Powelton  Electric  Co.  (1890) 
Manufacturers'  Electric  Co.  (1890) 
Diamond  Electric  Co.  (1890) 
Suburban  Electric  Co.  (1890) 
Wissahickon  Electric  Light  Co.  (1893) 
Northern  Electric  Light  and  Power  Co.  (50  per  cent,  of  stock) 

(1885) 
West  End  Electric  Co.  (1890) 
Bala  and  Merion  Electric  Co.  (1891) 
Germantown  Electric  Light  Co.  (1884) 
[  Keystone  Light  and  Power  Co.  (1886) 


Philadelphia 
Electric 
Company 
(N.J.)Oct. 
5,    1899 


Pennsylvania 
M  anuf ac- 
turing  Light 
and  Power 
Company 
(N.  J.  Feb. 
3,  1898) .... 


National 

Electric 

Company 

(May  1,1899) 


r  Southern  Electric  Light  and  Power  Co.  (1890) 

_,  T-  V.X  /-.  /-lonoN  /Chester  Electric  Light  and 

I  Beacon  Light  Company  (1896)  |      p^^^^  Company 

Overbrook  Electric  Co.   (1893) 

Cheltenham  Electric  Light,  Heat  and  Power  Company  (1890) 


Kensington  Electric  Company  (1893) 

Delaware      f  Media  Electric  Light,  Heat  and  Power  Co. 
County  Elec-  I  Philadelphia  Suburban  Electric  Co. 
trie  Company  ]  Faraday  Heat,  Light  and  Power  Co. 

1909  [  Citizens'  Electric  Light  and  Power  Co.  of  Delaware  County 

The  Philadelphia  Electric  Company  (Pennsylvania)  (1902) 

When  Philadelphia  Electric  Company  (of  New  Jersey)  was 
incorporated  in  1899  $2.50  was  called  on  each  of  the  1,000,000 
shares  of  stock,  a  total  of  $2,500,000  or  10  per  cent,  of  par.  At 
present  this  stock  is  90  per  cent,  paid  or  $22.50  on  each  $25 
share.  The  balance  sheet  as  of  December  31,  1914,  shows  un- 
called subscriptions  to  capital  stock  to  the  sum  of  $2,498,175  as 
against  a  total  liability  on  capital  stock  of  $24,987,750.  The 
difference  between  the  two  which  represents  approximately  the 
amount  "paid  in"  on  these  shares  is  $22,489,575.  Of  this 
amount,  however,  not  all  represents  a  direct  payment  of  cash 
by  the  stockholders  to  the  company.  On  three  different  occa- 
sions dividends  were  declared  by  the  Company  and  at  the  same 


147 

time  a  call  made  on  the  stockholders  for  additional  payments 
on  their  stock  subscriptions.  Amounts  receivable  in  dividends 
were  made  applicable  to  the  payments  on  stock  and  thus  con- 
siderable sums  were  transferred  from  "surplus"  to  "capital." 
This  was  done  to  the  amount  of  $1  per  share  on  March  2,  1908, 
$1.50  on  March  15,  1910,  and  $1.50  on  December  1,  1913.  This 
is  a  total  of  $4  per  share  or  an  aggregate  of  $3,998,240.  The 
effect  of  this  may  easily  be  traced  in  the  comparative  balance 
sheet  of  the  company  and  in  the  comparative  income  account, 
both  of  which  are  given  for  the  years  1900  to  1914,  inclusive,  in 
Appendix  B  at  the  conclusion  of  this  narrative. 

Dividends  have  been  paid  by  the  company  as  follows:  June 
16,  1902,  15c.  per  share;  December  16,  1902,  June  16,  and 
December  16,  1903,  1834c.  per  share;  from  1903  to  June,  1908, 
5  per  cent,  per  annum;  from  December,  1908,  to  December, 
1912,  6  per  cent,  per  annum;  March,  1913,  11/2  per  cent.;  and 
since  that  date  1%  per  cent,  quarterly.  The  stock  is  now  on 
a  7  per  cent,  basis,  all  payments  being,  of  course,  not  on  par 
value  of  stock  but  on  the  amount  "paid  in"  on  that  stock. 

CONCLUSIONS 

Before  concluding  this  study  we  should  emphasize  several 
points.  Attention  should  again  be  called  to  the  fact  that  the 
recital  is  necessarily  incomplete.  The  public  press  from  1890 
to  the  present  time  has  been  filled  with  accusations  that  the 
electric  light  interests  of  the  city  have  from  time  to  time  exer- 
cised an  improper  amount  of  political  influence  and  that  at 
certain  stages  of  the  history-  we  have  been  narrating  large 
amounts  of  securities  were  issued  in  return  for  which  nothing  was 
received  in  the  form  of  property  or  cash.  These  accusations 
are  so  numerous  and  persistent  that  the  disinterested  observer 
is  strongly  inclined  to  suspect  that  some  such  transactions  have 
occurred  but  their  extent  can  not  be  ascertained  and  any  esti- 
mates are  impracticable. 

The  general  plan  that  was  followed  in  the  consolidation  of 
the  electric  light  properties  of  Philadelphia  w^as  to  utilize  the 
holding  company  as  a  form  of  organization.  To  this  per  se  there 
can  be  no  objection,  since  otherwise  any  unification  of  the 
numerous  companies  would  have  been  difficult  if  not  impossible. 


148 

The  objectionable  features  of  the  movement  have  been  the 
process  of  changing  stock  into  bonds  and  hence  of  dividend  pay- 
ments into  interest  charges. 

Even  if  the  amount  of  outstanding  securities  had  at  no  time 
been  increased  improperly,  the  numerous  changes  of  stock  into 
certificates  or  bonds  can  not  be  approved.  Dividends  on  stock 
are  merely  returns  to  the  owner  of  the  property  who  may  at 
times  regret  his  failure  to  receive  dividends  but  who  has  no 
ground  for  action  against  the  company  because  of  such  failure. 
Moreover,  failure  to  pay  dividends  has  little  effect  upon  public 
opinion  as  compared  with  a  default  on  interest  payments  and  a 
receivership. 

In  the  history  we  have  been  tracing  we  have  repeatedly  ob- 
served this  being  done  with  an  accompanying  large  increase  in 
securities  and  fixed  charges.  Stock  of  the  Edison  Electric  Com- 
pany was  purchased  in  part  by  a  payment  in  certificates  (or 
bonds)  of  Pennsylvania  Heat,  Light  and  Power  Company,  which 
in  addition  issued  $10,000,000  of  stock  upon  which  a  small 
amount  of  cash  was  paid,  i.  e.,  $3,500,000.  This  $10,000,000  of 
stock  was  then  purchased  with  certificates  (or  bonds)  of  Penn- 
sylvania Manufacturing  Light  and  Power  Company  which  at 
the  same  time  issued  $15,000,000  of  stock  on  which  only 
$1,500,000  was  paid.  The  same  process  was  repeated  by  Phila- 
delphia Electric  Company  in  1899  when  it  acquired  Pennsyl- 
vania Manufacturing  Light  and  Power  Company  and  National 
Electric  Company  by  paying  for  them  with  certificates  and  then 
issuing  its  own  stock. 

Any  calculation  of  the  difference  between  the  amount  of  secur- 
ities issued  and  the  value  of  the  property  acquired  must  be 
viewed  as  tentative  only,  subject  to  revision  when  more  facts 
are  available.  With  this  reservation  as  to  conclusions  we  may 
submit  the  following: 

We  have  explained  the  organization  in  1895  of  Pennsylvania 
Heat,  Light  and  Power  Company  which  brought  together  Edison 
Electric  Light  Company  and  the  group  of  properties  known  as 
Electric  Trust.  The  structure  thus  created  is  pictured  on  page 
121.   An  analysis  of  the  available  information  indicates^  that  there 


Supra,  p.  123. 


149 

had  been  invested  in  these  properties,  including  a  generous  allow- 
ance for  the  patents  acquired,  an  amount  not  in  excess  of  $3,- 
131,200.  There  were  issued  by  the  new  corporation  securities 
to  the  amount  of  $10,494,300,^  and  there  was  left  about  $600,000^ 
of  unexpended  cash.    We  thus  secure  the  following  result: 

Securities   issued $10,494,300 

Securities    acquired 3,131,200 

Increase    $7,363,100 

Less  unexpended  cash 600,000 

Net   increase $6,763,100 

In  the  formation  of  Pennsylvania  Manufacturing  Light  and 
Power  Company  (pictured  on  p.  131)  securities  were  acquired  and 
new  securities  were  issued  as  shown  in  the  following  table.  From 
the  increase  as  thus  ascertained  may  be  deducted  $1,500,000,  as 
this  amount  was  paid  in  on  the  new  company's  stock  and  ap- 
parently was  not  expended  in  the  purchase  of  properties. 

Securities  acquired 

Pennsylvania  Heat,  Light  and  Power  Co.  stock: 

Preferred  (So  000  000—70  per  cent,  paid) ....     $3  500  000 
Common  (issued  "full  paid"  but  given  as  a 

bonus  to  subscribers  to  the  preferred  stock) .       5  000  000 
Hamilton  Electric  Companj',  etc 2  698  189 

SU  198  189 

Securities  issued 

By  Pennsylvania  Manufacturing  Light  and  Power 
Company: 
Philadelphia  Electric  Gold  Trust  Certificates 

—OS $13  275  000 

Common  stock  ($15  000  000—10  per  cent,  paid)    1  500  000 

$14  775  000 

Increase  in  amount  of  securities  outstanding 

Securities  issued  (as  above) $14  775  000 

Securities  acquired  (as  above) 11  198  189 

Increase $3  576  811 

Less  $1  500  000  cash  which  may  not  have  been 

spent  in  purchase  of  securities  as  above 1  500  000 

Net  increase $2  076  811 

'  Supra,  pp.  122  and  124. 


150 

In  the  formation  of  National  Electric  Company  (pictured  on 
p.  136)  securities  were  acquired  and  issued  as  follows.  Since 
the  last  payment  of  $2.50  per  share  by  stockholders  of  National 
Electric  Company  was  presumably  not  used  to  purchase  stock 
of  subsidiaries  we  may  deduct  that  sum,  or  $875,000. 

Securities  acquired 

Southern  Electric  Light  and  Power  Company 

stock $498  800 

Beacon  Light  Company 115  250 

Overbrook  Electric  Company 10  000 

Cheltenham  Electric  Light,   Heat  and  Power 

Company 49  990 

$674  040 

Securities  issued  by  National  Electric  Company 

Stock  ($17  500  000—25  per  cent,  paid) $4  375  000 

Increase  in  amount  of  securities  outstanding 

Securities  issued  (as  above) $4  375  000 

Securities  acquired  (as  above) 674  040 

Increase $3  700  960 

Less  $2.50  per  share  not  used  in  this  purchase. . . .  875  000 

Net  increase $2  825  960 

And,  finally,  in  the  formation  of  Philadelphia  Electric  Com- 
pany (of  New  Jersey)  securities  were  acquired  and  issued  as 
follows:^ 

Securities  acquired 

Pennsylvania  Manufacturing,  Light  and  Power 

Company — stock $1  499  410 

National  Electric  Company  stock  ($17  500  000 

—25  per  cent,  paid) 4  375  000 

$5  874  410 

Securities  issued  by  Philadelphia  Electric  Company 
(of  New  Jersey)  in  acquisition  of  this  stock: 
Philadelphia  Electric  Gold  Trust  Certificates— 4s 15  014  142 


1  At  its  formation  the  Philadelphia  Electric  Company  of  New  Jersey  issued  $25,000,000 
of  stock  on  which  it  called  10  per  cent.,  or  $2,500,000,  but  there  is  no  evidence  at  hand  to 
indicate  that  this  sum  was  used  in  the  purchase  of  the  stock  of  Pennsylvania  Manufacturing 
Light  and  Power  Company  and  National  Electric  Company. 


151 

Increase  in  amount  of  securities  outstanding 

Securities  issued  (as  above) $15  014  142 

Securities  acquired  (as  above) 5  874  410 

Net  increase $9  139  732 

Bringing  together  these  various  amounts  we  have  the  follow- 
ing as  the  various  increases  in  outstanding  securities  by  the 
time  Philadelphia  Electric  Company  of  New  Jersey  was 
organized : 

Pennsylvania  Heat,  Light  and  Power  Company S6  763  100 

Pennsylvania    Manufacturing    Light    and    Power 

Company 2  076  811 

National  Electric  Company 2  825  960 

Philadelphia  Electric  Company  (of  New  Jersey) . .       9  139  732 

$20  805  603 

We  thus  find  successive  increases  in  outstanding  securities 
over  and  above  any  acquisitions  of  tangible  property,  of  which 
we  have  any  trace,  to  the  amount  of  $20,805,603.  Since  $3,998,- 
240  of  stock  of  Philadelphia  Electric  Company  has  been  issued 
as  "stock  dividends,"  some  may  consider  that  this  amount  also 
should  be  included.  If  this  is  done,  we  have  a  total  of  $24,803,843. 
On  the  other  hand,  it  is  stated  that  $2,000,000  of  5  per  cent, 
certificates  and  also  $2,000,000  of  4  per  cent,  certificates  have 
been  retired.  Deducting  these  two,  or  a  total  of  $4,000,000, 
we  have  left  $20,803,843  as  the  amount  of  securities  that  have 
been  issued  in  excess  of  direct  investments  by  the  owners  of 
those  securities. 

There  have  been,  of  course,  other  sources  of  income.  One  that 
immediately  suggests  itself  is  the  profits  that  are  said  to  have 
been  realized  through  the  Electric  Company  of  America.  The 
gains  thus  made  have  not  been  made  public.  With  this  excep- 
tion, and  perhaps  others,  any  increase  in  the  value  of  the  prop- 
erties must  have  come  from  earnings. 

The  significance  of  the  situation  lies  in  the  fact  that  it  was 
necessary  for  the  company  to  charge  for  its  services  at  rates 
sufficiently  high  to  keep  up  interest  and  dividend  payments  on 
these  securities.  Of  the  items  that  go  to  make  up  the  $20,805,- 
603   just    given,    the   first   two   which    total   $8,839,911    appear 


152 

in  5  per  cent,  certificates,  the  interest  on  which  amounts  to 
$441,995  per  annum.  The  other  two  items  amount  to  $11,965,692 
and  appear  as  4  per  cent,  certificates,  the  annual  interest  on 
which  amounts  to  $478,627.  The  two  charges  combined  are 
$920,622,  which  is  the  amount  it  was  necessary  for  the  company 
to  earn  each  year  merely  to  maintain  interest  charges  on  this 
excessive  issue  of  securities.  After  the  retirement  of  $2,000,000 
of  5  per  cent,  and  $2,000,000  of  4  per  cent,  certificates  this  was, 
of  course,  reduced  by  $180,000,  leaving  $740,000  per  annum. 
This  is  without  reference  to  the  $3,998,240  of  "stock  dividend", 
the  annual  dividends  on  which  at  7  per  cent,  amount  to 
$279,876.80. 

The  situation  at  the  time  of  this  writing  is  difficult  to  picture 
with  accuracy.  The  present  value  of  the  properties  is  not  yet 
known,  and  pending  the  results  of  the  appraisal  which  is  being 
conducted  by  the  company,  speculation  on  the  matter  is  idle. 
Several  points,  however,  are  perfectly  clear.  Outstanding  secur- 
ities upon  which  interest  and  dividends  must  annually  be  paid 
include  $1,994,300  Edison  Electric  Light  Company  5s,  $11,268,- 
060  Philadelphia  Electric  Company  5s,  $15,014,142  Philadelphia 
Electric  Company  4s  and  stock  (less  amount  still  subject  to 
call)  amounting  to  $22,489,575.  These  four  combined  total 
$50,766,077  in  outstanding  securities. 

If  the  properties  have  a  value  that  is  at  all  near  this  amount 
it  is  largely  if  not  entirely  due  to  the  reinvestment  of  earnings. 
To  accomplish  such  a  result  it  has  been  necessary  to  charge  for 
services  rendered  an  amount  sufficient  to  earn  a  return  on  capital 
actually  invested,  maintain  interest  payments  on  the  excess 
securities  issued'  and  enough  more  to  build  up  the  value  of  the 
properties  to  the  amount  that  an  accurate  appraisal  may  now 
discover. 

There  are  thus  two  general  possibilities  in  the  present  situa- 
tion. In  the  first  place,  there  may  still  be  a  wide  difference 
between  the  value  of  the  company's  property  and  the  amount  of 
securities  outstanding.  If  this  be  true,  we  must  conclude  that 
the  rates  that  have  been  and  still  are  charged  for  service  are 
greatly  in  excess  of  the  amount  needed  for  a  fair  return  on  the 
actual  investment.     The  other  possibility  is  that  earnings  have 


153 

been  year  after  year  reinvested  in  the  plant  and  equipment  until 
there  is  no  longer  so  great  a  difference  as  formerly  between  actual 
investment  and  capitalization.  How  fully  such  a  change  may 
have  taken  place  is  to  be  determined  only  by  a  careful  appraisal. 
But  if  it  has  occurred  it  must  have  been  because  rates  have  been 
maintained  at  a  level  that  would  make  the  change  possible.  Such 
rates  are,  of  course,  much  greater  than  would  have  been  neces- 
sary to  pay  a  reasonable  return  merely  on  the  direct  investments 
of  security  holders  and  are  obviously  in  excess  of  the  amount 
necessary  to  pay  them  a  reasonable  return  on  the  present  value 
of  the  plant.  This  is  true  even  though  the  appraisal  should  in- 
dicate that  the  value  of  the  property  is  equal  to  the  company's 
capitalization. 


154 


3 

Oh 


O 

< 

o 

>^ 

< 

Oh 

8  ° 

g    § 
Eh     00 

w 

O 

iz; 

;§ 

H 
H 
<J 
H 


i 

;t2 

s 

i 

ii 

$440  931 

285  515 

(7percent) 

: 

s 

2 

II 

o 

9» 

O   iO 
(N    CO 

S2   a 

IN 

00 

o 

i 

OS    (N 
00    t^ 

00  >o 

2 

o 

CC 

00     -H 

^S5 

2  2? 

^             CO 

s 

«« 

1 

i  11 

cc 

s 

CO 

00   o   ^ 

CO  (N  a 

00 

o 

05 

^2 

o 

00 

to    00 
CO    CO 

00 

s 

i 

CO 

s 

o 

SS3 

CO   (N 

o  o 

•* 
■<<< 

Z 

1 

t^    CO 

cc 

s 

IN 

O 

00 

i 

5 

c 

0 

s 

c 
'c 

s 

«- 

0  S 

c 

c 
o 
o 

-S 
c 

1 

•fl 

s 
g 

CO 

o 

s 

O 

il 

o  £ 

4. 

s 

C 
C 

a. 

£ 
c 

1 

.1 

"s 
£ 
> 

c 
T 

r 

e 

1 

£ 

c 
£ 
c 

CO 

a 

0 

1 

cr 

a 

0. 

•> 

a 

. 

155 


o    ^ 


i 

§ 

u 

i 

(N       ■ 

•  IS 

•  CO 

•  (N 

84  078  780 
407  865 
176  413 
927  648 

1 

o     ■ 

X       • 

i 

<* 

t>      -   X   (M 
X       •    O   <N 

o     •  c^i  b- 

i 

2 

1-H    C<3    •* 

X       • 

X    C   M 
b-    O    C^ 

C<l    C    CC 

O    O    (N       : 

^   : 

(N 

O  Oi  •* 

»    (N    M 

a 

s 

00      .  ^  t>. 
t*     •  o  t* 

X       •    "3    CO 

S   :     5 

«»    - 

s 

1 

«o  -^  e* 

CM 

■*     ■ 

CO 

1  ;i 

C5       • 

S   : 

m     ■ 

S    :§2 

o    -  o  o 

O                CJ 

CO       • 

OS 

SI 

i 

§    : 

■  as 

N      •   C 

s   ■  = 

5S    : 

05 
X 

o 

X 

n 

lO           (NO 

O       •    X   (N 

CO          .                Tf 

o     •        t* 

2 

X 

o 

X 

00 

S    M    02 

CO     T}<     Tjt 

j:S2 

o  ^^ 

SI 

2^    :  ^ 

L-:     •  iu- 

5ig    : 

s 

OS 

u 

2    isS 

o     ■  -v  a> 

CO 

Li 

o 
o 

CO 

1 

f 

1 

1 

s 
§ 

CO 

§ 
s 

c 

'c 

u 
S3 
C 

1 

• 
■ 
• 

1  • 

■? ' 

3 

0 

i 

2 

hi 

B 
g 

5 

=  - 

o  - 

< 

:1 

:  i 

'.  1 

0  : 

1  \ 
>    c 

ll 

=  = 

5  0 

i 
! 
i 

I 

3 

3 
E  ' 

5  c 

•  i 

•  S  • 

;  5 
:  s* 

3    ■    ■ 

§     •     ■ 

2  6   : 

fii 

§  £  S 

I.    3    cJ 

ill 

i 

i 

'c 

e 

1 

"**      5 

i  _ 
:    =5 

156 


X 

I— ( 

Q 

Oh 
Ph 

<1 


<    ^ 


OS    - 

H          00   c 

IS          l^   - 

H              CO 

•H    C 

3          f 

■1   c 

3           '-i    a 

3           CO 

T}<     t 

M           O    C 

IS        o  e> 

<      « 

CO  v 

S         CO  c 

3          CO   r- 

■(           Tf 

»o  e« 

5        (N  ^ 

O  u 

3           •* 

O  1- 

■t          OS   "■ 

3           •<}(    C 

3           •* 

S^ 

1           o   4 

3           t^    C 

3           CO 

»o  c 

CO   c 

3           Tjt    C 

3            rH    C^ 

i 

3             rM    C 

2 

3           CO    O 

s         Tt<  ir 

3           OS 

lO   c 

5              I-H     P 

3           lO    "■ 

3           O 

Tj<     U- 

J           §§ 

3           OS    C^ 

)             r-l 

CD  ir 

5           ^   a 

3           t>-   b 

O 

00   t^ 

5            O    C 

3           Tjt 

«o  C 

.           CO. 

'    sg 

OS   c 

3          OS    ^ 

^            S^ 

M  «* 

3 

«» 

^^ 

9» 

(N  ^ 

U5    C 

3        lO  c: 

3           CS 

«  c 

3          00   C 

3       00  ^ 

IC 

00  o 

S          00   c^ 

1        o  c 

3           OS 

CO   y- 

^          (N   C 

3          Oi   a 

D           -1 

»-c  a 

3        (N  ^ 

O   Cv 

)           t". 

00    -■ 

H             l^    IT 

3           C^    N 

O 

§ 

•-H  ;£ 

5        Tjt  ^ 

(N  ir 

3           CO 

o 

t-    C£ 

5            1-1    C 

3           00    C 

3           CS 

■*  o 

s        ■*  c: 

5           .1    If 

3           CO 

00    y- 

<           t^    O 

s        t>.  ^ 

lO 

OS 

£? »: 

•*  c: 

3             r-l    ^ 

CO 

2 

CO    C 

5           O   O 

s        o  - 

■1           (N 

IN    <£ 

5           lO    Tj 

H             o    C 

O    OC 

5           CSl    O 

5             (N    r- 

^          CO 

rn   a 

S                Tf<     Tj 

1*        OS  c 

lO    CC 

>           00    rl 

i           CO    ^ 

<          t^ 

«» 

«« 

«» 

«» 

CO   C- 

1 

Tt<     C 

3 

^          ,_( 

9© 

«» 

«« 

8§ 

>       o  c 

3 

o 

S^ 

)         00  c 

3           W    O 

s          N. 

5        o  c 

) 

o 

Tj*     C 

)           M<    C? 

3          00 

1— i  1- 

i       o  ^ 

t>. 

CO    t> 

CO  "■ 

>           i-l    C£ 

>           t* 

t^  o 

S          00   o 

> 

t^ 

o 

>-•  o 

J       -^  c 

5           00    "■ 

3           CO 

o 

OS   t- 

rH    Ti 

:     ^ 

rH    C 

>       o  o 

S           O    « 

3           t^ 

OS 

U3    C 

5              IC     r- 

•           CD 

OS 

Tft  ef 

)        ^  o 

^           ^g 

3           »H 

OS   <X 

)            »-l    C'' 

1 

rfH 

o  o 

5             ^    O 

3              <-H 

N    O 

'    ^- 

:     ^ 

S  c( 

00^ 

<           CO    1- 

1              Tt< 

fO   Cv 

Tt<     C 

) 

»» 

«« 

«» 

§i 

>       o 

o 

CS  a 

rH     « 

)        CO  cc 

3           OS 

>           O 

o 

■*  - 

CO   t> 

»o  0( 

3           CO    • 

t^  c 

t^ 

t^ 

-*  « 

CO    ^ 

T-4      Tj 

i             CO 

§ 

OS  c 

)             OS 

OS 

s 

-1    CM 

00   t£ 

C^l   c 

00    rt 

T(< 

r}< 

OS    ^ 

t-    CV 

>0    r- 

H             CO 

OS 

CO  «■ 

,_, 

,_! 

OS 

CO    t^ 

§^ 

o  c 

3           O 

00  «r 

CO 

CO 

b-    CC 

3           O 

(©    IT 

a» 

9» 

«    - 

i;^ 

CO    OC 

CO    cr 

«e 

e© 

1 

«» 

0 

c 

c 

1 

e 

£ 

0 

1 

93 

T3 

73 

C 

;« 

m 

a 

a 

) 

J3 

c 

u 

-o 

O 

!• 

M 

3    t 

6  S 
0  5 

Ih 
O 

03 

> 

c 

g 

"  1 

1 

^        > 

1 

-o 

> 

"i 

«3 
i 

c 

c 

> 

s 

0 

Si 

o 

-£ 

3 

ID 

_o 

3  c 

1-^ 

II 

1  s 

fl  = 

II 

1 1 

o   «; 

•> 

t-     H 

0)     E 

>  •-< 

u     D 

o 

w 

!? 

M 

<; 

O 

1 

o 

O 

Q 

1 

157 


<;      w 


OS 

§ 

§ 

^ 

00 

o 

o 

i 

5 

o 

§    1 

o 

i 

eo 

1^ 

^            o 
.-1             OS 

<o             « 

3                   00 

.-4    rjt 
(N    CO 

CO    "3 

^    00 

t*  eo 
00  t^ 

t*    00 

■*    CO 

t^  OS 

CO 

s 

! 

<N 

2 

^                    CO 

i      i 

I^                    Hi 

<0    OS 

O    00 

eo 
eo 

.-H 
OS 

00 

00 

2 

i          i 

CO    lO 
CO    OS 

ss 

si 

CO 

§ 

2 

OS 

i      S 

OS                  t^ 

00  r^ 

?3    00 

Si 

OS    ■* 

OS 
"3 

eo 
eo 

I-H 

lO                o 

n             ^ 

M                   IN 
OS                  t^ 

25 

Is 

5 

OS 

eo 

i 

00               cc 

t>.                          I-H 

i     i 

o  o 

OS    •* 
00   (N 

gs 

o 

s 

1 

C 

S  2    : 

11; 

•Hi 

be  Ji 

.2  "  § 
tJ  -o  ." 

ill 

a 

f 

c 

a 

i 

d 

3 
<n 

-a 
a 

1 

> 

2 

b 
c 

> 

a 

i 

i 
■& 

00 
00 

3 

,    O 

■> 

1 

a 
1 

i 

1 

O     O 

-§  I 

-^  a 

ro  '3. 

n        ^ 

3 


T3     »- 


1  = 

'^    00 
Ji«!     3 


S    C3 


158 


^  00 

m  ^ 

^  1 

w  ^ 

Oh  CO 

§  I 

S 


2 

§ 

OS 

s 

05 

i 

O 

s 

CO 

g 

88 

o  >o 

1 

1 

00 

2 

1 

•O    (M    t-i    (N    05    O       ■ 
(N    (N    M    IC    t-    lO       • 

«N    ,H    O    -H    C5    ^       • 

SS'*^2?!§    • 

Tj(                   CC    CO 

CO 

22?5§8 

lO   Tt<   O   l^   o 
O  O  lO   T«  o 
Jg!    r5    00    O   io 

CO 

2 

LO    ?0     r-l     lO     O)     O 

(M    C5    CO    W    1^    O 
(N    •-<    (©    »0    05    t^ 

o 
o 

! 

o 

s 

1 

§§§s 

■*    CO    <£>    05 
Ci                 ^ 

8| 

< 

88 

t^  o 

ii 

888 
5§2S 

t^   CO 

I 

s 

2 

§§8S 

O    05   «0    lO 

Tj<     «0     »0     « 

CO^CO;:^ 
^                 t^ 

CO 
C<1 

(N   O 

8888 
S8ie^ 

r-l    O    00    N 
(N    »0           CO 

8 

o 

2 

i 

1? 

t 

c 

1 

f7 

'a 

C 

a 
£ 

1 

e 

c 

1 

1 

a 
c 

t 
'c 

oi 

c 
E 
c 
t 
a 

C 

a 
,  c 

1 

)  y 

i 
■I 

I 

'i 
c 

ij 

1. 
i 

i1 

.2 

•  I 

•  £ 

M 

3      C 

< 

•  e 

•  a 

:  £ 

3      > 

11 

C 

£ 

c 

> 
•| 

1 

1 

3     0 

5  C 

c 

c 
a 

I 

>  ; 
> 

p. 

c 

c 
c 

-^ 

c 

'i 
(1 
c 

*0 

1 

0 

C 
C 

^    \ 

3    ^ 

0 

:  1 

!  1 
1    c 

1 

3 
\ 
3 

3 
3 

1 

? 

i 

\\ 

Vi 

i  c 

i  I 

n 

■  > 

•  c 

•  a 

3  < 

:.2 

:  S 

£ 

i 

IS 

3    £ 

i  ? 

3    « 

Ii 

5  < 

I 

5 

1 

i 

\'. 
ll 

3    ° 

n 

n 

I     I 

I 

3 

3 

5     J, 

3    : 
5     C 

n 

3 

: 

159 


<     "5 

o    1 


X  5 

Oh  "^ 

E  I 

Oh  O 


i 

a 

PI 

§ 

2 

n 

00 

o 

o 

Tjt 
CO 

00 

CO 

CO 

X 

g 

o 

00 

r» 

w 

00 
CI 

X 

CI 

i 

T}<                  M   M   O   LT    to                 O 

§ 

X 

o 

s 

i 

00<Noe<3xeoco 

OWOCCOCCOC! 

O  o  i.-;  r^  CO  CO  o  t^ 

5      s- 

§§ 

CO    X 
X 

s 

s 

CO 

i 

§  §  §  §  ^  s  s  § 

«OOro»«oc<>cso 

i'-iiisl 

2         2  '^ 

5 

g 

N 

^ 

2 

§S;52§2?2 

C5    t^    lO    C5    C^    P3    O    ■^ 

00           (N    O    CO    (N    -H    ^ 

©                  CC   ■*    CS    W   Tit 

■«1<    X 

§ 

to 

. 

c« 

Si; 

B 

-2 

c 

•s 

1 

s 
j 

1 

1 

'1 

1    c 

c 

* 

1 

"c 
si 
b 

1- 

i 

1 

.1 

1 

£ 
2 

1 

-   c 

1 

I 

's 

t 

a 

a 
,   i 

C 

C 
t 
Z 

1 

ci 
J 

a 

c 

1 

OC 

1 

> 

c 
-  E 

< 

1 

< 

a 

C 
•    C 

;    C 

C 

C 

'    s 

5      > 

;  < 

a 
e 

B 

c 

e. 
> 

e 

1 

-c 

i 
'  > 

1 

c 
e 

j 

c 

t 

C 

:  s 
■z 

\l 

'    a 
c 

i    ; 
;  J 

3  s 

id 

8 

ii 

•3 

.« 

e3 
OS 

1 

,| 

C 

ill 

>    c 

,     C 
.    a 

1 

e 

e 

c 
c 

1 

c 
< 

•  ? 

I 
1 

,  £ 

c 

c   J 

5    < 

;     < 

;  i 

I 

i 
> 

1 

h 

1  5 

H 
11 

9 

5 

i 

n 
]    ; 

1    < 

i    s 

11 

160 


H 

§ 

H^ 

(-5 

w 

v» 

< 

H4 

» 

-^ 

P4 

hJ 

'S 

1 

<J 

l-H 

« 

S 

a 

Ah 

'S 

«5q 

OS 

s 

"5 

i 

§ 

CO 
CO 

o 

b- 

05 
00 

CO 

CO 

CO 
CO 

CO 

o 

CO 

o 

OS 

i 

o 

CO 

b- 

(N 

(N 

CO 

00 

§ 

b- 

« 

CO 

M 

OS 

1-1 

00«OCO«D<N(NQOOtJ4 
OOlNWCOiOOMiCeO 

^2S§§S§J:S52 

OOOS»00«0.-liO<©          o 

CO 

OS 

8  S  S  s  ^  ^  ;2;  ^  g  5  S 

•^                 t^   CO   ^   «0   b-                  00 

I 

CO 

i-H 

2 

oio«ooo<©oooosoeoi« 

0«0^(MiOl«000(N.-HOO 
Ot»WiOCDOC<lt>.00000 
t^C0i£>t0>0C0<N'*-*O^ 

(N           lOiCCOeOOO'*           OOiC 
0»                   OS    rH                                          O 

o 

i 

o 

OS 

§  S  S  5  ^  S  ^  5S  ?^  ^  2 

OS                   t^    CO    CO    <0    CO                   OS 
g                 2    ^                                       00 

«5 

§ 
s 

i 

2 

5 

1 

1 

1 

c 
a 
E 

1 

c 

1 

C 

c 

b 

'( 

i. 

•   a 

6 

1 

e 
g 

2 

'     0 

"a 

G 

w 

1 

a 

0. 

t 
"a 

c 
C 

t 

c 

o! 

-  "a! 
J 

1 

1 

a 

i 

1 
t 

■£ 

1   c 

<; 

DC 

e 

i 

s 

c 

« 

C 

a 
E 
> 

C 

1 

c 

> 

< 

a 

c 

"c 

c 

1 

c 

> 

1 

t 
c 

< 

t: 

c 

a 

«. 

C 

e 

i 

i 

> 

j 

c 

C 

t 

J: 

1 
5 

'{ 

t: 

« 

e( 

e 
e 

a 

c 

I 
1 

a 

c 

> 

c 

I 

c 

1 

1 

c 

I 

I 

I 

< 

I 

E 

ei 

C 

1 

c 
a 

E 

a 

c 

1 

°  J; 

a. 

t: 

I 

< 

H 

c 
c 

1 

c 

c 

c 

1 
ii 

161 


ll 

8 
S 

s 

15  014  142  00 

703  650  00 

1  100  656  39 

00 

i 

$24  987  750  00 

15  014  142  00 
278  588  61 
800  134  86 

«o 
o 

2 

$7  500  525  00  1 
17  487  225  00  J 
15  014  142  00 
3  910  01 
563  567  99 

8 
! 

o 

1 

$5  002  350  00 

19  985  400  00 

15  014  142  00 

564  046  00 

446  677  00 

8 

§ 

^ 

J3  752  982  00 

21  234  567  00 

15  013  512  00 

225  366  00 

131  497  00 

§ 

8 

CO 

1 
1 

6 

I 

c 
-». 

X 

< 

6 

Eh 

h 

c 

e 

•     X 

> 
c 

g 

■J 

c 

■t- 

P. 

-3 
1 

s 

o 

i 

8 

I 

B 
8 

a 

1 

> 

O 

5 

a 

3 

8 

« 

s 

CO 

3 
o 

<5 

c 

i 

13 

s 

> 

C 

3 
o 

1 
1 

o 
Z 

a 

3 

J 

o 
T 
■> 

5 

CO 

c 
o 

£ 

1 

? 

B 
o 
u 

1 

OQ 

a 

j 

162 


^ 

<! 

PLh 

-« 

^ 

s 

O 

K 

u 

C 

C) 

^ 

tf 

H 

n 

O 

1^ 

c 

<f 

y, 

^ 

w 

Ph 

i 

s 
u 

O 

2 

88  847  95 

165  779  50 

4  947  60 

.8 

s 
s 

CO 

8 

(M 

i 

t-     ^  cc  o 
m 

^§8 

o 

00 

2 

8   §^^ 

t^       ^    C)    © 

t^       Tf   o   "-I 

05       O   OS    i-I 
■*       lO           (N 

IN    OS   t*    O 
^    r^             CO 

i 

t^       -"f    CO    <N 

00       .--    O    CO 
OS      o  o  t^ 

t^  t^  o 

(N 

O 
(N 

2 

1  ^ 

S    2 

t^   O    ■* 
00    t>-    00 

!!! 

rH    t,    00 
Tt    t^    CO 

00 

• 

1 

0 

i 

■  "i 

-►J 
c 

o 
t 

c 

c 
c 

•   r 

5- 

1 

c 

f 

11^ 

"a 
a 

C 

a 
< 

m 

4 

1 

0 

o 
o 

o 
J  > 

03 
% 

1 

a 

3 
« 

1 

C 

c 
c 
S 

0 

-a 

<D 
3 

c 
« 

^-^ 

3 
-    no 

1, 

3 

< 

1 

> 

g 
1 

o 

c 
3 

3 

-c 

■> 

Q 

CO 

,  o 

'A 

c 
£ 

ID 

c 

s 

§ 

:: 
a 

163 


< 

I  i 

I  O  ^ 

s  O  = 

e  ^  C 

Q^  pj  -5 

i  B  J 

Z  ^  \ 

g  K  .1 

5  s  1 


8 

O 
in 

30 

00 

IN       •       • 

i^   :   : 

t>.   •   • 

-  •v     • 

§ 

IN 

N 

CO 

CO 

2 

I*       ^    rj.    O       •    W 

t^        Tf    00    t^        ■    O 

M       ^    ^    CO       ■   CS 
OS       O    00    O       ;   -}. 

■*       ifl           .-1       -   .-1 

•    <N       ■ 

'■  la     '■ 

2   ':    ':   ': 

CO 
<N 

g 

OS 

8  §sj2  : 

|>       ^   ^   O       ; 

?:;    2  J5  2    • 

5 

i 

CO 

CJ 

o     o  «  ^ 

■     •  n 

.        ■    yf 
.        .    •«}< 

;§  M  : 

o 
2 

s 

CO 

o 

o 

i  §  ■ 

lO  ca 

si 

:  ;§ 

: «    :   :   : 

s 

2 

1 

c 

£ 

a 

I 

"5 

1 

c 
c 
c 

1 

'  t 

c 

9    e 

:>  I- 

3 
3 

5 

1 

;  :1 

■     •   2 

:    :  1 
i  12 

Ml 

ill 

3   «     O 
J     O     « 
J     h     « 

on            '. 

2     •     • 

i  ■■  X 

£    :  "S 

o     .   ^ 

i  -i 

=  5 . 

Ill 

Is  1 

111 

C     u     b 

g  g  s 
<  <  < 

3 
3 

-<  5 

.      .      .    on 
.     .     .    <u 

■   ■   :  2 
':::§. 

iiii 

Gaylord  Bros. 

Makers 

Syracuse,  N.  Y. 

PAT.  JAN.  21,  1908 

3^^' 


^S 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


